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The ABCs of Increasing Your Credit Score

The ABCs of Increasing Your Credit Score 1

Understand What Makes Up Your Credit Score

Before you can get started on improving your credit score, you need to understand what goes into it. The FICO score, the most widely used credit score, is calculated based on:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New credit (10%)
  • Credit mix (10%)
  • Improving your score requires that you address each of these factors. Want to expand your knowledge on the topic? Access this carefully selected external resource and discover additional information. examine Further!

    Pay Your Bills on Time

    Paying your bills on time is the most important thing you can do to improve your credit score. Late payments have a negative impact on your score, so it’s essential that you make all of your payments on time. If you’re consistently late with payments, consider setting up automatic payments or reminders to help you stay on track.

    Reduce Your Credit Utilization Ratio

    Your credit utilization ratio is the amount of credit you’re using compared to the amount you have available. This ratio accounts for 30% of your score, so it’s important to keep it as low as possible. Experts recommend keeping your credit utilization ratio below 30%.

    If your utilization ratio is high, consider paying down your balances or asking for a credit line increase. Just be careful not to run up more debt in the process.

    Keep Old Credit Accounts Open

    The length of your credit history makes up 15% of your credit score, so it’s important to keep your old credit accounts open. Having a longer credit history gives lenders more information to make decisions about your creditworthiness.

    If you have an old credit card that you’re not using, resist the urge to close the account. Keeping the account open and using it occasionally will help to keep it active.

    Avoid Applying for Too Much New Credit

    Opening new credit accounts can negatively impact your score, both in terms of the number of inquiries made on your credit report and the fact that new accounts decrease the average age of your credit history. Experts recommend limiting new applications to a few times a year.

    Monitor Your Credit Report

    Monitoring your credit report can help you identify errors and fraudulent activity that could be hurting your score. You’re entitled to a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every year. Review your report for errors and take steps to correct any issues. Keep advancing your educational experience by exploring this suggested external material. Analyze further, you’ll find valuable insights and additional information about the subject.


    Improving your credit score can take time, but it’s worth the effort. By understanding what factors impact your score and taking steps to address each one, you can increase your score and open up more opportunities for credit in the future. Remember to pay your bills on time, keep your credit utilization ratio low, maintain old credit accounts, avoid applying for too much new credit, and monitor your credit report for errors.

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    The ABCs of Increasing Your Credit Score 2

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