You can improve your credit score, but it does take time and being aware of what impacts your score.
Your credit history determines about 15 percent of your credit score. The longer you keep an open line of credit, you will have a higher chance of getting a good credit score. You should aim for seven years.
Your payment history determines about 35 percent of your credit score. If you have made payments on time, you will be more likely to have a good credit score. Your credit score can take a big hit if you miss a payment.
If you have a credit limit of $10,000 and you use only $1,000, you will be able to improve your credit faster compared to someone who uses 90 percent of their credit limit. Ideally, your credit utilization should be under 30 percent.
It’s important to diversify your credit. Your credit mix makes up 10 percent of your credit score. You should include credit products like mortgage loans and credit cards.
If you have bills that were sent to a collection agency, you need to pay the bills. Usually, the debt collection agency can reverse the impact on your credit score.
Also, keep your hard credit inquiries to a minimum. Requests for credit reports from lenders can decrease your score by 5 points to 10 points.