Improve credit score fast the smart way using these 5 tools

Your payment history accounts for 35% of your credit score and this is by far the most important factor of your report. It shows whether you make payments on time, how often you miss them, how recently you have missed payments and how many days do you allow to pass before making those payments.

To ensure a high score, the number of timely payments has to be high as well. That’s because each time you miss a payment, your score is impacted negatively. The history gives lenders a snapshot of how you paid your credit card bills. If you paid late more times than you paid on time, you are deemed at a higher risk by lenders.

These payments only affect your score once you cross the 30-day mark and the longer you go without paying, the worse your score gets.

This is the ratio of your outstanding credit balance to your credit card limit, which means that it measures how much credit you have left in your card. For instance, if the balance is about $300 and your limit is $1,000, then the utilization will amount to 30%. So if you are doing $500 worth of shopping on the card per month, your utilization rate should be 50%.

The lower your credit utilization percentage is, the better your credit score. That’s because it will prove that you are only using a small amount of the credit that you borrowed. To calculate this percentage, all you need to do is divide your credit card balance by your credit limit and then multiply the amount you get by 100.

Ideally, that percentage should not go over 30% so make sure you pay your balance in full every month. Ideally, your utilization rate should be less than 10%, which is possible if you make all of your payments on time.

This is based on the amount of time you have had your credit card. Whether you’ve had one for six months or 10 years, it can make a difference to your credit score. Generally, the longer an account has been open and active, the better it is for the credit score, especially if the account has a positive credit payment history.

While having several credit types can increase your score, applying for several accounts at once to improve that number is not a good idea. That’s because lenders also look towards your recent activity i.e. how much credit you have received or applied for in the past 3 to 6 months and whether you are paying off accounts or accumulating more debt.

Credit card issuers examine your credit history before reviewing applications for a new card. This is understandable since it will tell them if you pay your bills on time, the number of open accounts you have and whether there are any delinquencies that can prove troublesome for them down the road.

The number of inquiries they place for the past 12 months accounts for 10% of your credit score. So the agency can just look up that number to determine if you are a suitable candidate for a new card or not.

The final component that determines your credit score is your credit mix or mix of credit. This is determined by several types of installment and revolving credit and it accounts for 10% of your score. By maintaining this, you can prove that you can manage several types of loans simultaneously, which spells good news for your score.