Your credit score affects your life. It affects the loans for which you can apply, your ability to buy a car, the likelihood you’ll be able to apply for a payment plan, and even your chances of getting certain employment. Because of the importance of credit scoring, a low credit score can negatively impact your life.

Unfortunately, you can’t build up your credit score overnight. It takes diligence and hard work. In order to be able to build your credit score up to excellent levels, you first have to understand what affects your score. We’ll then look at what you can do to make your score better.


What Affects Your Credit Score

There are a number of factors that go into your credit score. Some may surprise you more than others. The factors include:

  • How much credit you have available compared with how much you’re using (your credit card balances divided by your total open credit card limits). In essence, if you have a maxed out card or a near maxed out card for a long period of time, you score can be negatively affected.
  • Making payments on time. If you miss payments or make late payments, your credit score will be negatively affected.
  • Filing for bankruptcy, having a foreclosure, or having a lien are all example of derogatory marks that can show up on your credit score.
  • The age of your credit. The more credit history you have, the more accurately your credit can be assessed. This means that it is wise for you to keep older credit open, because the older they are the more it shows that you can wisely manage your credit.
  • The number of accounts that you have, and the variety. Accounts can include credit cards, loans, lines of credit and mortgages. Having a higher number of accounts is good, but that does not mean that you want to have a ton of credit cards. You want some revolving and some installment credit in your history.
  • The number of hard credit inquires also affects your score. A hard credit inquiry is when a financial institution has to check your credit score in order to approve you for a loan or credit card.


When you know what affects your credit score, it is easier to understand what you can do to build your credit score back up.

How to Build Your Credit Score

In order to build your credit score you have to practice good credit habits. Good habits include, but are not necessarily limited to:

  • Keep your credit card debt below 30% of your credit limit at any one given time. This means you won’t have huge balances carrying over from month to month.
  • While you don’t want to carry huge balances over month to month, you do want to make sure to use your credit cards regularly. Otherwise you run the risk of the cards being closed by the carrier for not being used enough.
  • Make your payments on time. That means utility bills, credit bills, rent or mortgage, loan payments and anything else that may report to the credit bureaus.
  • Keep your accounts open for as long as you can. This will help age your credit history.
  • Similarly, you don’t want to open too many accounts around the same time because this will lower the average age of your accounts. Remember – old credit history is good.
  • You also don’t want too many accounts of one type. While you want to make sure to use your credit cards and to try not to close them, you don’t want to have 30 credit cards with little balances. When you pay something off, like a car or your home, keep it on your credit score. You can call in and have it removed from your score, but leaving it on is a good thing. It shows that you can manage debt well.
  • Finally, you want to make sure to periodically check your credit reports. This will help you catch any errors early, which will make them easier to fix.


Following these easy tips will help you grow your credit. Once you’ve grown your credit it is easier to keep your credit up high, especially when you continue to keep these guidelines in mind.


Pay Attention to Your Credit

You credit score does affect a lot of your life. Because of that, you have to pay attention to your score. Part of that means knowing how to check your score. You may be entitled to one free credit report every year from, or you can purchase your scores for a small fee from one of the major credit bureaus. Even if you have to pay the fee, you should check your credit score annually. It will help you make sure that everything is on track. This will help eliminate surprises when you go to apply for loans.


Starting your credit score or building it back up after a few setbacks can be difficult, however it is important for you to remember that it can be done. Bad credit can affect your life for a long time. Start to get out from under bad credit by following these tips, and keeping a close eye on your credit score. If you have any questions, you can talk to a financial professional. They will be able to go over your options for increasing your credit score in further detail.


Just because you have had bad credit in the past doesn’t mean you always have to have bad credit. Start building up your credit by having good debt, making payments on time and keeping track of everything related to your credit. You can build up your credit score. It may not happen overnight, but it can be done.