Whether you’re buying a car, renting a home, or taking a new step in your career, your credit score follows you. It’s essentially your reputation as a borrower—something lenders, landlords, and sometimes employers review to understand how responsibly you manage money.
The easiest way to strengthen your credit is to understand the five factors that influence your score. Here’s a clear breakdown of what matters most and how to set yourself up for long-term financial success.
1. Payment History
Nothing impacts your score more than paying your bills on time. Payment history makes up 35% of your total score. This includes credit cards, loans, and any bills that may be sent to collections if unpaid. Even though landlords or utility companies don’t typically report positive payments, missed payments can show up and hurt your score.
If you’re struggling, reach out to your creditor immediately—many offer payment plans or hardship options that won’t damage your standing.
2. Amount Owed (Credit Utilization)
The amount of debt you carry makes up another 30% of your score. Using too much of your available credit suggests higher risk to lenders. Aim to keep your balances low—ideally under 30% of your credit limits. Reducing debt over time is one of the most powerful ways to improve your score.
3. Length of Credit History
This factor accounts for 15% of your score and looks at how long your accounts have been open. This is why keeping your oldest credit card active (as long as it doesn’t have an annual fee) can benefit your score. A longer history signals stability.
4. Types of Credit
A mix of credit types—such as credit cards (revolving credit) and loans (installment credit)—makes up 10% of your score. Showing that you can responsibly manage different forms of credit helps lenders feel more confident in approving you.
5. New Credit
Opening too many accounts in a short time can lower your score and make you look overextended. Each application results in a “hard inquiry,” and too many inquiries close together can be a red flag. Be selective—store credit cards, for example, often come with high interest rates and aren’t worth it unless they truly fit your needs.
You can always check your own credit report to stay aware of what’s being reported and to monitor for signs of identity theft. Request your free reports from all three bureaus at AnnualCreditReport.com.
To explore credit card options at Addition Financial, click here. For more financial resources and educational tools, visit Addition Financial’s blog.
Valerie Moses is a Senior Relationship Manager at Addition Financial Credit Union, where she manages public relations and community partnerships. She also writes at Wellness & Wanderlust.
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