Managing Your Credit Score

November 2021credit score

Since your credit score is an indicator of your financial standing, it plays a large role in determining your eligibility for loans and favorable interest rates. If you’d like the opportunities that come with a higher credit score, here are some of the best practices for managing your money to boosting your score.

Comb through your credit report

Your credit report gives you an overview of your loans and credit card accounts, which helps you spot areas for improvement. Every year, you’re entitled to a report from the three major credit monitoring bureaus, TransUnion, Experian, and Equifax. Instead of requesting all three at once, consider spacing them out throughout the year, so you can track your progress. Elaina Johannessen, a program director at nonprofit organization LSS Financial Counseling, suggests looking at more than just your score on the report and paying attention to the details so you can catch and correct any errors that could be dragging down your score.

Make prompt payments

Your payment history is the single largest factor in calculating your credit score. Pay your bills on time, and be sure to cover the minimum monthly payment. It may sound simple, but if you have trouble keeping track or remembering to make payments on time, Investopedia contributor Rebecca Lake has some tips that could help you stay on course. Lake suggests setting up due-date alerts, automating your payments, and setting up a system for filing your bills, whether you receive them on paper or via email.

Monitor your credit limit

Aside from making timely payments, your credit utilization is the other major factor in determining your score. It’s a good idea to maintain a balance under 30 percent of your credit limit. That said, if you’re trying to build your score, try to keep it under 10 percent of the limit on each card. If you have to pay for a big-ticket item, Nerdwallet contributor Amrita Jayakumar recommends distributing the cost between several cards or paying your card’s balance down in chunks before the due date to keep it consistently low throughout the month. You can also check your credit card’s website to see if there’s an option to notify you if your balance is nearing 30 percent of your limit.

Pump the brakes on applying for credit

If you frequently apply for credit, your credit score gets knocked down a bit. That’s because creditors consider it an indicator that you’re scrambling for money, and may not be able to handle your debts. To prevent your score from taking too much of a hit, Jayakumar suggests that it’s better to separate your credit applications by at least six months. There’s one exception to this rule, however — if you have multiple loan applications within 14 days, your credit won’t suffer, because that’s simply an indicator that you were looking for a good deal.

Other ways to bolster your credit score

Need to grow your credit score, but don't have a long credit history? Lake suggests several options to help you prove your creditworthiness. Experian Boost is for people with a short credit history, but a record of meeting their obligations on time. Experian Boost and UltraFICO are programs that report your financial data that usually isn’t factored into your credit score, like your utility payments and financial account management, to help prove that you’re a reliable borrower.

For more tips on managing your credit score, or to request your free annual credit report, go to