Your credit score acts as a gatekeeper to your financial life, controlling the interest rates you receive on home loans, auto financing, and credit limits. Optimizing this score can save you hundreds of thousands of dollars over a lifetime. Here are the top ways to improve it:
Utilization and Payment History
Payment history makes up 35% of your score, so automated payments are vital. Credit utilization makes up 30% of your score. Keep your balances below 10% of your total limits. You can lower this ratio instantly by requesting a limit increase from your current card issuers, or by paying off balances twice a month before the statement closing date.
Additionally, avoid opening multiple new accounts in a short period to prevent hard inquiries, and keep your oldest credit cards open to maintain a long credit history length.
Run your own numbers
Use our Net Worth Tracker to see how these principles apply to you.