In partnership with GreenPath Financial

Whether you’re looking to get your first credit card for everyday expenses or apply for personal loan to purchase your first home, credit is essential for helping you meet your financial goals. When applying for a line of credit, the higher your credit score, the more likely it is you will qualify and the more options you’ll have available. Below, we break down the six factors that influence your score—in order of most heavily weighted to least—and the simple, effective steps you can take to boost your score.

Your credit score is based on patterns over time, with an emphasis on more recent information. Improving credit doesn’t happen overnight, but if you implement these tips, you’ll start to see an increase in your credit score.

Understand Your Current Credit Picture
Federal law requires each of the three nationwide consumer credit reporting companies, Equifax, Experian, and TransUnion, to provide a free credit report every 12 months to consumers who request it. While these reports don’t contain your actual score, they are beneficial in identifying what factors might be affecting it as well as any inaccurate information that may need correcting. Unfortunately, research shows that women are more likely to be denied a line of credit, so knowing your score is a great starting point for building a plan to manage it. Request yours at

Payment History

Payment history is the most significant single factor used to calculate your credit score. Late payments (even only by a couple of days), past due accounts, and accounts in collections all have a negative impact on your credit. Regular, on-time payments of the minimum amount or greater will improve your credit score. On-time payment history for 18 months or longer will show results in a growing credit score. Check out our quick tips for credit card and loan payments below:

  • Set up automatic payments. If late payments are due to forgetfulness, this is the easiest way to ensure you never miss a future payment.
  • Change your billing date. Suppose you have multiple bills due on the same day of the month. In that case, it may be worth changing your payment date to better align with your income schedule.
  • Use personal savings. It always helps to have extra money in a personal savings account for emergencies, or if cash flow happens to be tight – keeping money in a personal savings account can help you avoid late payments, and you can always pay yourself back without penalties later. Explore some of our best savings account online options.
  • Explore hardship/deferment options. If you’re having trouble making ends meet, call your creditors and request a forbearance or payment deferral. They may also waive late fees or allow a lower payment for some time.

Credit Utilization

Your credit utilization is the total credit limit available to you compared with how much you’re spending, expressed as a percentage. For example, if you have a spending limit of $2,500, and your card balance is $600, then your credit utilization is $600/$2,500, which is 24%. As a rule of thumb, your credit utilization should be no more than 30%. Here are some easy tips to help you lower your credit utilization:

  • Pay down your balance early. If you make small payments throughout the month, you’ll keep your overall balance down.
  • Decrease spending. Find areas where you can cut back on spending to lower your utilization.
  • Ask for a credit line increase. Increasing your credit limit is the simplest way to decrease your credit utilization without cutting back on spending.

Length of Credit History

Although not the most heavily weighted category, the length of a borrower’s credit history is essential. It indicates to financial institutions what kind of borrower you may be in the future. In addition to the overall time an individual has had credit accounts open, credit history is also determined by how long specific types of accounts have been open, and how long it’s been since those accounts were used. We recommend keeping your cards open, as closing a credit card can negatively affect your score. If you have cards you aren’t using, placing a small recurring charge on them (such as a phone bill or streaming subscription) can help to keep the card active while keeping your overall credit utilization low.

Credit Mix

Credit mix is determined by the types of credit you are carrying. This includes credit cards, retail accounts, installment loans, mortgage loans, and your payment history in each area. You may already have a fair credit mix—things like credit cards, personal loans, auto loans, and mortgage loans are all considered different types of credit. Since your credit mix isn’t the most impactful category, you should only apply for personal loan if it makes sense for you and your financial needs. We’ve got a lot of options that are customized to our community; our Credit Builder Loan is a great way to build a healthy credit score, no matter whether you’re starting out or starting over.

New Credit

It’s important to open new credit accounts only as needed. Every time you apply for a new credit card, this creates a “hard inquiry” on your credit, which automatically lowers your score briefly. Plus, having more credit than needed can encourage unnecessary spending and increase debt.

Hard inquiries appear differently on your report for different types of loans. While multiple searches over a short time frame for credit cards may result in significant score damage, other inquiries—such as home or auto loans—are reported slightly differently. Since lenders know people often shop around, these inquiries won’t hit your report for 30 days, and when they do, they’ll be counted as a singular inquiry.

We’re here to help you build healthy money habits. If you need extra help navigating your credit report, get in touch with our trusted nonprofit partner GreenPath: their credit counselors can walk you through a free credit report review and help you make a plan for managing your credit score to support your goals.

Looking for more information on how to apply for personal loan? Check out our personal loan options, read stories of borrowers just like you, or meet our loan officer.