Your credit score is a key indicator of your financial health, influencing everything from loan approvals to interest rates and even job opportunities. Understanding the factors that impact your score can help you make informed financial decisions and take steps to improve it. At Ole Hill, we believe that knowledge is power when it comes to financial success. Let’s break down the top factors affecting your credit score and how you can work towards better credit today.
1. Payment History (35%)
Your payment history is the most significant factor in your credit score. Lenders want to see a track record of on-time payments, as this shows that you are a responsible borrower.
How to Improve It:
- Always make payments on time, even if it’s just the minimum amount due.
- Set up automatic payments or reminders to avoid late fees.
- If you’ve missed payments in the past, start making consistent on-time payments to rebuild your score over time.
2. Credit Utilization (30%)
Credit utilization refers to how much of your available credit you’re using. A high credit utilization ratio can signal risk to lenders and negatively impact your score.
How to Improve It:
- Keep your credit utilization below 30% of your total credit limit. Ideally, aim for 10% or lower.
- Pay off balances before the statement closing date to reduce reported utilization.
- Consider requesting a credit limit increase to lower your utilization percentage (as long as you don’t increase spending).
3. Length of Credit History (15%)
The longer your credit history, the better it is for your score. Lenders prefer borrowers with a well-established history of responsible credit use.
How to Improve It:
- Keep older credit accounts open, even if you don’t use them often. Closing them can shorten your credit history and impact your score.
- If you’re new to credit, consider becoming an authorized user on a family member’s long-standing account with a positive history.
4. Credit Mix (10%)
Lenders like to see a mix of different types of credit, such as credit cards, auto loans, and mortgages. A diverse credit portfolio shows that you can manage various types of credit responsibly.
How to Improve It:
- If you only have credit cards, consider taking out an installment loan (such as a small personal loan) to diversify your credit mix.
- Be strategic about new credit applications—only take on new credit when necessary.
5. New Credit Inquiries (10%)
Each time you apply for new credit, a hard inquiry is recorded on your credit report. Too many hard inquiries in a short period can lower your score and make you look risky to lenders.
How to Improve It:
- Avoid applying for multiple credit accounts at once.
- Space out credit applications to minimize their impact.
- Pre-qualify for loans and credit cards when possible to avoid unnecessary hard inquiries.
Take Control of Your Credit with Ole Hill
Improving your credit score doesn’t happen overnight, but with the right strategies, you can see progress over time. At Ole Hill, we specialize in helping individuals and business owners repair and strengthen their credit so they can achieve their financial goals.
📞 Call 1800-308-6467 for a FREE credit analysis and consultation!
🌐 Visit www.olehill.com to learn more.
Don’t let a low credit score hold you back—take action today and start building the financial future you deserve!