Building a Good Credit Score

A good credit score can open many doors and lead to great opportunities -- but building credit can seem like a mystery at times. It’s not as straightforward as building savings, and the dots you have to connect can be tricky. Here’s a closer look.

What Goes Into Your Credit Score

  • 35% is your payment history. (Do you pay your bills on time?)
  • 30% is your credit usage or utilization. (How much debt do you have?)
  • 15% is your account age. (A combo of your oldest account, newest account, and their average age. Longer is better.)
  • 10% is your mix of credit. (You want to show you can handle a mix of loan types.)
  • 10% is recent activity. (Applying for too much credit in a short period of time shows you need money.)

Do’s And Don’ts To Maintain A Good Score:

  • DO: Make it a point to pay all your bills on time.
  • DON’T: Miss a credit card payment — it can lower your score by 100 points or more.
  • DO: Keep your credit usage or utilization — the percentage of credit you have available to you that you’re actually using — low.
  • DO: Check your credit reports from all three bureaus (Equifax, Experian, Transunion) annually at annualcreditreport.com to be sure there are no errors or fraudulent accounts in your name.
  • DON’T: Open credit cards you don’t need (just to get the store discount).

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