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Heres the thing, though: Lenders dont usually take the time or ability to verify your good intentions.
To gauge your creditworthiness, they look at your credit score.
Heres a look at what makes up a credit score, and how to improve your credit score numbers.
Landlords will also often run your credit when you apply to rent an apartment.
Some employers might run your credit when deciding whether to hire you.
Thats why your credit score matters.
It can mean the difference between landing your dream house or job, and not.
To boot, a high credit score typically translates into lower interest rates and higher-quality loans and credit cards.
Youll need to be consistent.
Start with these steps:
1.
Payment history makes up 35% of your overall score.
To avoid submitting a late payment, try setting calendar reminders.
Even better, enroll each of your loans to autopay for the minimum payment.
That way youll never be delinquent, even if making a payment slips your mind.
If you do forget, immediately make a payment.
Creditors tend not to report a payment as late if you act quickly to resolve it.
After that, youll get a negative mark on yourcredit report.
The longer youre delinquent, the worse it is for your credit.
Lower Your Credit Card Balances
Your credit utilization ratio has a large influence on your credit score.
This represents the amount of available credit that youre using.
Credit utilization makes up 30% of your overall score.
The lower your credit utilization, the better.
give a shot to keep your utilization under 10% for the best score.
you’re able to keep your amounts owed low by:
3.
Dont Apply for Too Much New Credit at Once
Two factors are affected when you open a new loan.
The first is your length of account history, which is about 15% of your credit score.
Opening a new account decreases the average age of your accounts.
The longer your average account age, the better it is for your credit score.
The second is new credit, which makes up about 10% of your credit score.
This inquiry will appear on your credit report, and it will temporarily lower your credit score a bit.
A lot of applications at once can make you lookdesperate for credit, which is risky to lenders.
For this reason, you should only apply for new credit when youve got a good reason.
Dont just open credit cards left and right without thinking about how it fits into your goals.
To extend your credit history, it takes more than simply avoiding opening new credit cards all the time.
Keep your old accounts open, even if you dont use them often.
For example, you likely havent been using the starter credit card you first opened when you were younger.
Instead of canceling it, put it aside and allow it to be a pillar of your credit history.
Use Different Types of Credit
Credit mix accounts for 10% of your overall credit score.
Having exclusively credit cards isnt as beneficial as having one or two other loans, as well.
Of course, its not worth taking out a loan just to improve yourcredit mix.
Only open accounts you truly need.
Mistakes on your credit report can lower your score, often through no fault of your own.
you might get a free credit report each year fromAnnualCreditReport.com.
How Long Does It Take to Improve Your Credit Score?
If your score is low because of loan defaults, it may take years to undo those mistakes.
No matter your situation, its possible to improve your credit with determined effort.
Think of credit improvement like a marathon, not a sprint.
The longer you build good habits, the better your score will get.
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