Your credit score can affect your ability to borrow money and the interest rate you may receive, so it’s worth understanding what goes into it.
The good news? You don’t need to do anything complicated to build healthy credit habits.
One of the most important factors is payment history. Consistently making payments on time is one of the best things you can do for your credit.
Your credit utilization matters, too. This refers to how much of your available revolving credit you’re using. Keeping balances relatively low compared with your available limits can help your credit profile.
The age of your credit accounts is another consideration. If you have an older credit card that you use responsibly and don’t need to close, keeping the account open may help maintain a longer credit history.
The number and types of accounts you have can also factor into credit scoring, but that doesn’t mean you should open accounts simply to increase your score.
In fact, one of the biggest mistakes people make is applying for credit they don’t actually need.
It’s also a good idea to check your credit reports periodically for inaccurate information or accounts you don’t recognize.
Remember that checking your own credit report does not hurt your credit score.
Finally, don’t obsess over a few points. Credit scores can change from month to month based on your balances, payments and other factors.
Instead, focus on the habits that matter most: pay bills on time, manage debt responsibly, avoid unnecessary applications for credit and review your credit information regularly.
A good credit score isn’t built overnight. It’s the result of consistent financial habits over time.
