There are 5 main things that affect your credit score. Some weigh more than others, so if you are working on improving your credit score, you want to first focus on the areas that will have the biggest impact.
These five things, in order of importance, are:
- Your Payment History (35% of your score)
- How Much Credit You’re Using (30% of your score)
- How Long You’ve Had Credit (15% of your score)
- How Often Your Credit is Pulled (10% of your score)
- The Types of Credit You Have (10% of your score)
The percentages above are how the factors weigh on the average person. The exact balance may vary a little from person to person, but this is a pretty accurate description.
So, from looking at the above, the first thing you want to concentrate on when fixing your credit score is to make sure you have a good payment history. How do you do that? Simply pay your bills on time. In fact, if you have a low credit score, here’s a quick fix. Open a new secured credit card, use it to purchase just small, inexpensive items, and pay your bills in full each month, your credit score will improve in about 90 days.
Probably the most overlooked way to immediately improve your credit score is the “how much credit you’re using” factor. By simply keeping your available credit to outstanding debt ration low (below 25% is a good place to be), some people can almost instantly increase your credit score. The best way to do this is to increase your credit limit.