The single most important factor in determining your credit score is your payment history. Pay on time, and your score soars. Miss payments, and the score will sink.
Yet, 62% of Americans are in the dark about the fact that their payment history impacts their score more than anything else, according to a survey from CompareCards. The website says:
“The survey results made clear that while many Americans have dutifully checked their credit score in the recent past and know how important it is to their financial health, most of us still aren’t sure about what factors and behaviors play into the making of a credit score.”
Other survey findings include:
- 32% have held off on paying down debt, falsely believing their score would suffer if they didn’t carry at least some debt.
- 41% believe their credit score will suffer if they check it too often — which is not true.
In reaching its results, CompareCards commissioned Qualtrics to conduct an online survey of 1,241 Americans.
How to boost your credit score
Paying your bills on time is indeed of utmost importance if you are trying to boost your credit score.
Lenders use the FICO score more than any other in determining how much of a credit risk you are. The factors that your FICO score is based on are:
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- New credit: 10%
- Credit mix: 10%
Having a great credit score can be a crucial asset to your financial life. In particular, a great credit score can get you the best rates on loans, such as car loans and home mortgages.
A bad credit score is likely to cause you to pay more for your loan — if you can get the loan at all.
While paying your bills on time every time is the cornerstone of building a great credit profile, there are other things you can do to lift your score.
For more tips on building your score, check out:
It’s tough to raise your credit score if you’re drowning in debt. Need help getting back to dry land? Stop by the Money Talks News Solutions Center and find expert — and free — credit counseling help.
Do you have any tips for climbing out of debt? Share them in comments below or on our Facebook page.
Earn more interest on your savings
Are you earning as much interest on your savings as you could be? Grow your savings faster with banks offering rates that are significantly higher than the national average. Find the best rates and start earning more interest on your savings by using the Money Talks News savings account and CD comparison tool.