An individual’s credit score is extremely important to their overall finances. A poor credit score impacts the types of loans you’re approved for, factors into the cost of your mortgage, and can make purchasing a car quite difficult. Understanding the factors affecting your a credit score will equip you with the power to make a positive change. Here are the 5 main credit factors, in order of weight.

Payment History

Your payment history says a lot about you – to the credit card companies, at least. Your payments have by far the largest impact on you overall score. If you want to improve your credit score, be diligent with payments. Pay on time, and always more than the minimum. Try to clear all balances each payment date. This tactic will keep your payments up to date, but also compounds into the next factor.

Total Debt

Your overall debt is the next chunk of your credit score. If you’ve racked up a ton of debt, be prepared to drop down a few pegs on the credit score. Accruing large amounts of debt harms your score because it alarming to lenders. On paper, they see that you’ve racked up a sizable debt, but are unable to pay it off. The lower you can keep your balance, the better off your score will be.

Age of Credit History

As time passes, your credit score grows stronger. The longer you’ve been managing credit, the more information lenders have on you. They can see a broader scope of what kind of borrower you are. If you have a long track record of consistent payments and low debt, a slip up is not going to hurt you quite as much as someone with their first credit card.

Credit Types

Revolving accounts and installment loans are the two different credit types you can possess. Credit cards are revolving accounts and student loans, mortgages, and student loans are all installment loans. Having both credit types can help your overall score by a small margin because it shows you can manage differing types of credit.

Credit Inquiries

Applying for too many loans and credit cards is the final way to impact your score. Trying to open several credit card and loans within a short time, especially after being denied, sends a red flag to lenders, You send a loud and clear message that you’re unable to get by without credit and need it to pay for things you want and need.