Forgot Password / Enroll

How to improve your credit — and why it’s important

A credit report is the historical record of your credit. All your borrowing and payment transactions are recorded in your credit history. Five factors make up your final credit score.

  • Payment history — This category factors in your payment history. Paying late has a negative effect on your score. The later your payment and more frequent number of late payments, the more it impacts your score. Time can help improve your score in this area so if you have missed payments in the past, get started now on a plan to ensure you are making all your future payments on time.
  • Credit utilization — The credit utilization ratio measures how much debt you have compared to your available credit limit — how much you owe in total compared to the original loan amount or credit card limit. A good rule of thumb is to keep outstanding balances at under 30 percent of your limit.
  • Credit history — A longer history of using credit will improve this area of your credit score. Keep this in mind when managing your credit cards particularly. Keeping those old credit card accounts open, even if you no longer use them, will help this category of your credit score.
  • Credit mix — It helps to have a mix of different types of credit, such as a mortgage, auto loan, credit cards, etc. You do not necessarily need to have each of these, so it’s not a good idea to open accounts you don’t need and won’t use.
  • New inquiries — Opening several credit accounts in a short period of time can have a negative effect on this section of your credit report. When you apply for a car loan or mortgage loan from different lenders around the same time to compare deals, only one inquiry will be recorded. Your score is not affected when you check your own credit.

Your credit score impacts many aspects of your financial life. Your score is checked every time you apply for credit such as loans and credit cards. Lenders look at credit scores to decide if they will allow you to borrow, and determine the interest rates offered. Your credit score might also be checked when you are renting a home or apartment, obtaining insurance, and before you are hired for a new job.

It’s a good idea to review your report regularly and take steps to correct any mistakes you might find. Every 12 months you can receive one free credit report from each bureau. Visit for your free credit report.

5 factors of your credit score