How to improve my credit score?

A higher credit score means lower mortgage interest rates, better credit card offers, and better insurance rates. Increasing your credit score fast is possible.

Not all credit problems are the same because the reasons for a low score vary depending on your personal credit history factors, your current financial situation, and your money management style. No matter what the reason, there are five key factors to create your own personalized plan to improve your credit score.

Learn about the 5 key factors impact your credit score

Your credit score is based on five keys factors and they hold the solution to improving your credit. If you can get these five things right, your score will go up naturally and easily over time.

  • Payment history is the most important credit factor because it shows whether you pay your debts on time, every time. This makes up roughly 35% of your score.
  • Credit utilization describes the amount of credit you’ve used in relation to your total credit limit. This makes up roughly 30% of your score.
  • Credit age shows how long you’ve maintained your credit accounts and older is better than younger. This makes up roughly 15% of your score.
  • Credit mix is the variety of credit accounts you have. More than one type shows you can manage a range of credit products. This makes up roughly 10% of your score.
  • Inquiries show how often you apply for credit and what types. This makes up roughly 10% of your score.

These things negatively impact your credit score every time

Not all credit problems are the same. Late payments, collections, bankruptcy, many credit inquiries, a high credit card utilization rate, and even credit report mistakes all have a negative effect on your score.

Now ask yourself the following questions and keep track of the “yes” responses: The first step is to diagnose the reason for your less-than-perfect credit score.

Do you make late payments on your credit accounts?

The first and most important factor in your credit score is your payment history. Late payments quickly and negatively affect your credit score. Every monthly payment helps your score but just one missed payment can wreck all your progress. If you miss a due date, make the payment as soon as possible because lenders typically wait until a payment is 30 days late before reporting it.

Are your credit cards maxed out?

The second factor is credit utilization. Your credit utilization ratio counts nearly as much as your payment history. This is the amount of credit card debt versus your total outstanding credit limit. If all your cards are maxed out, you have very high credit utilization (also called amounts owed).  For example, if you have $3,000 of debt and a $4,000 combined credit limit, your utilization ratio is 75%.

Bring your balances down to improve your score. The lower your ratio, the better the boost to your score (people with the best credit scores use no more than 7% of their available credit).

Credit utilization is calculated for each card and overall. The goal is to have each card under 30%.

Do you close your old accounts or have only very new accounts?

The third factor is the average age of your credit accounts. Over time, you will gain points in this category and that’s one reason why you shouldn’t close old accounts or those you have paid off.

Do you only use one type of credit?

The next factor is credit mix. The credit bureaus like to see that you can handle a variety of credit products. For example, student loans, mortgages, and auto loans are all installment loans since the balance is fixed, but a credit card or home equity line of credit are revolving credit.

Do you often apply for new credit products?

The fifth and final factor is each inquiry into your credit, or credit application, can cause your score to drop by a few points. Soft inquiries, including employer checks, self-checks, and inquiries made for the purpose of pre-qualifying you for promotional offers do not hurt your score. Hard inquiries, however, are those made as the result of an application for new credit. Those are the inquiries to limit.

For each “yes” response, that is one of your personal credit factors that could be causing your low credit score.

Check your free annual credit reports for mistakes 

Correct errors to improve your credit quickly and easily. Many errors are inconsequential (such as a misspelled address), but others can hurt your score. For example, your credit report could mistakenly show that you never paid off an old car loan when, in fact, you did. It can also show you that you’ve been a victim of identity theft if someone else opened accounts in your name that you did not.

If there is an easy way to improve your credit score, it’s error correction on your credit reports. The Federal Trade Commission (FTC) estimates that as many as one in five consumers have an error on one or more of their three major credit reports, and many of those errors are serious enough to affect credit score. Depending on the type of error, asking the credit bureaus to correct them could have an immediate positive effect on your score.

Take a close look at all three of your credit reports. They are available for free, once every twelve months, at When you access your free credit reports, you won’t see your credit score, but you will see your credit history.



Enjoy the journey as you begin to build your credit score over time!

Email me with any additional questions.