What affects your credit score

Teach: What affects your credit score

What to say

Your credit score rests mostly on two habits: paying every bill on time, which matters most, and keeping card balances low compared with your limits. Next come how long your accounts have been open, how many new accounts you apply for, and your mix of credit types. Checking your own score does not lower it, and your reports are free to review.

What to show, in order

1. Set up automatic minimum payments on every card and loan so nothing is ever late.
2. Keep each card's balance well under a third of its limit when the statement closes, and lower is better.
3. Pay the full statement balance each month to avoid interest.
4. Keep your oldest card open and used lightly, since the age of your accounts counts.
5. Apply for new credit only when you need it; each application adds an inquiry.
6. Type the official free credit report site's address yourself and check your reports from all three bureaus.
7. Dispute any account or late payment that is wrong, with proof, through the bureau that lists it.

When to stop and call a professional

• An account you did not open appears on your report: freeze your credit at all three bureaus and report identity theft.
• Debt collectors contact you about debts you do not recognize: ask for written validation before paying anything.
• You want advice on your own numbers: a fee-only financial planner or a nonprofit credit counselor can give it; this page only explains the terms.

The check question

Ask: Which habit matters most for a credit score? Answer: Paying every bill on time

From EveryManKnows. General information, not professional advice.