The largest component or your Credit score is your payment history.  This accounts for 35 percent of your total credit score.  Payment history considers whether you’ve have any delinquencies (failures to pay on time), how recent those delinquencies have occurred and how many times they occurred.  Credit reporting agencies keep 24 months of monthly history month by month.  So the biggest thing you can do help your score is to start making your payments on time and keep making them on time. 

Another 30 percent of your total credit score concerns the amount you owe your creditors – especially credit card debt.  As we discussed in a previous blog, high outstanding balances and the ratio of balances to your credit limit will hurt your score.  So pay down those credit card balances until they are below 30 percent of your available credit.  Getting your outstanding credit card balances below 50 percent will help somewhat.

15 percent of your total credit score concerns how long you’ve had credit.  In general the longer you’ve had credit lines opened the better your score.  Not much you can do here but wait.

New credit applications are another 10 percent of your score:  Here the reporting agencies consider the number of account inquiries (made by potential creditors) and the number of new credit accounts you’ve opened.  So don’t make those instant store credit card applications just so you can get a one-time discount.  They aren’t helping your score. If you already have the cards don’t use them, or use them wisely (see above).

The last 10 percent of your score concerns the number credit lines you have by type:  bank cards, retail, department store cards, installment loans, etc.  People who have lots of credit lines opened by a given type get their credit scores lowered.  So consider closing the ones you don’t use or need.