How is your Credit Actually Calculated and How to Improve your Credit Score
See how different factors can affect your credit score and pro tips on how to improve it.
Items that affect your credit score include:
Your payment history (35%) - Pay all your bills on time and for the full amount every month. You can get your student loans into good standing and lower your monthly payments based on how much you can actually afford. Monthly payments can be as low as $0 and these $0 payments will still count as a full, one-time payment.
The amount of money you owe (30%) - Keep your credit card balance less than 30% of your total limit as this can lower your credit score.
The length of your credit history (15%) - Lenders look at how long you’ve had credit history by taking the average age of all your accounts - the longer your history, the better your credit score.
Types of credit you’ve used, (10%) - Having a diverse mix of credit types including student loans, credit cards, mortgages, etc will help improve your credit score.
Your pursuit of new credit (10%) - Limit the number of hard inquiries you make. Applying for multiple store cards or credit cards will negatively impact your credit score as they pull a hard inquiry for every application.