How to Improve Your Credit Score?

by Bievienea Harry

Your credit score has a huge impact on your life in a number of ways – it helps lenders decide if you will get approved for loans and credit cards, and also determines the interest rates you pay. That is why it is important to maintain a good credit score at all times.

Which factors affect your credit score?

Payment History

The timely manner in which you pay bills, determines 35% of your credit score. Serious payment issues, like charge-offs, collections, bankruptcy, repossession, tax liens, or foreclosure, can cause your credit score to plummet drastically. So make sure you aren’t late on bill payments.


Level of Debt

Debt level is determined by a lot of aspects such as amount of overall debt you carry, the ratio of your credit card balances to your credit limit (also called credit utilization), and the relation of your loan balances to the original loan amount.  It makes up 30% of your credit score.

Credit History Age

Having an older credit age (the age of your oldest credit account) is good as it portrays that you have experience in handling credit. The age of credit is 15% of your credit score and considers both the age of your oldest account and the average age of all your accounts. Closing existing accounts or opening new ones can lower average credit age.

Types of Credit on the Report

There are two basic types of credit accounts – installment loans and revolving accounts. If you have both types of accounts on your credit report, it reflects well as it shows you can manage different types of credit. It constitutes 10% of your score.

Number of Credit Inquiries

An inquiry is initiated on your credit report, every time you submit an application that requires a credit check. Since it makes up 10% of your score, one or two won’t matter, but several inquiries, especially within a short period of time can negatively impact the score.

How can you improve your credit score?


  • Review your credit report closely and dispute any errors you can find. Once the mistakes are corrected, your score will get a boost.
  • Write down payment deadlines for each bill in a planner or calendar and set up reminders online. If possible, pay down your bills every two weeks instead of once a month as it lowers credit utilization.
  • Although it increases your total credit limit, it hurts your score if you apply for or open several new accounts in a short time period. If you must close credit accounts, close newer ones, so the age of your credit history isn’t affected that much.
  • If you use multiple credit cards and the amount owed on one or more is close to the credit limit, pay that one off first to bring down your credit utilization rate.
  • Your credit mix such as mortgage, student loans, auto loans, and credit cards make up 10% of the score. Adding another element to the current mix helps your score, as long as you make timely payments.
  • Enroll in a debt consolidation program. Your score might drop temporarily, but as soon as you start clearing the debt with on-time payments every month, the score quickly improves.


Even after your score has improved you need to manage your finances and credit situation properly, so your score doesn’t go down again.