You just noticed that your credit score is not what you like. You’re not alone in this, as many Americans don’t have the credit score they desire. Improving your credit score will take time, so the faster you create a plan and address the issue, the faster your score will increase.

There are multiples ways to increase your score, but there is no faster way than paying your bills on time. 

Checking Your Credit Score

To get the best understanding of your credit score, you need to check your credit report. Looking at your credit report will allow you to understand your situation and what lenders are looking at. Additionally, a lot of credit cards will now offer you free monthly reports. Chase’s credit journey is an example of this and allows you to monitor your credit score. 

There are three credit reporting agencies you can get your report at, Equifax, Experian, and TransUnion. Only hard inquiries will affect your credit score. When you do a soft inquiry, such as checking your own score, this won’t affect your credit score.

Payment History

Your payment history is the most important metric in computing your credit score. When you are late or miss a payment, this will reduce your score. This negative information will remain on your credit report for up to 7 to 10 years. 

Additionally, your score will take into account the size and your most recent debt. The bigger your debt and the more recent you’ve missed payments, then your score will be negatively impacted. It’s important that you bring your accounts up to the current balance and continue to pay on time going forward for positives impacts on your score.

Utilization Rate

The next factor that will impact your score in your credit utilization rate. Your utilization rate is the sum of all your outstanding debt divided by your total available credit limits. Higher credit utilization can negatively impact your score. Maxing out one credit card will hurt your credit score, but maxing out all your credit cards is much worse. The rule of thumb is to keep your credit utilization below 30%. 

Number of Credit Cards

Your credit score also considers how many different accounts you have and how much is owed. If you have debt on a lot of your cards or some that are maxed out, it is beneficial to pay off some of the accounts. Once your balance is paid off, you should think about keeping the card open. Having a paid-off account will be positive since your utilization rate will decrease and the account will be in good standing. 

Opening New Accounts

Opening new credit cards over a short period of time will negatively impact your score. Some issuers have a 5/24 rule. This rule means that you can’t be approved for a new credit card if you have opened five or more personal credit cards in the last 24 months. Before you take our a loan or open the new account, consider how this will affect your score. The more recent the inquiry on your credit, the greater the impact on your credit score.

Even though negative information will remain on your credit report for 7 – 10 years, don’t let this deter you from improving your credit score. The best thing you can do is to show good credit management going forward. As you pay bills on time, lower your balances and utilization, your credit score will improve.