What’s Killing Your Credit Score? And How Can You Fix It?

As much as I hate to admit it, your credit score is actually a very important number to watch through life. Even if you pay for everything with cash (like I hope you are), your credit score is used by various agencies to evaluate your trustworthiness. If your score is low, they assume that you are irresponsible and failing to pay your bills. The key is to make sure you keep an eye on your credit score and raise it in whatever way you can.

Find Your Score

Did you know that there’s a site out there that will provide your credit score for free? Granted, it only provides the TransUnion Credit Score, but it still gives you a good idea where your overall credit limit stands. To get your score, just head to CreditKarma.com, create a log-in and it will spit out your credit score, along with many helpful details about how you can improve it!

**By the way, I wasn’t paid to mention the CreditKarma site. I just love it as a resource!

Areas to Improve Your Score

Credit Card Utilization

How much money do you charge on your credit card each month? To be in good standing with the credit rating companies, it’s ideal if you keep your charges below 20% (and above 1%) of your maximum credit limit. I did a really bad job at this the other month and my score definitely suffered. I love getting reward points, so I figured that instead of paying my college courses with my debit card, that I would use my credit card first for the points. So, I charged $2,850 on my credit card that had a $3,000 limit. Bad idea. I am still recovering from this move today.

cc utilization

Also, be sure to pay off your credit cards each month. As I understand it, you will actually earn a higher score if you pay off your balance each month than if you don’t.

Related: Top Rewards Credit Cards!

Payment History

Do you make your payments on time? This is also quite important for keeping your credit score up. I do a pretty good job at this since most of my bills have automatic payment set up.

payment history

Age of Credit History

If you have a credit card open that you’ve had open for as long as you can remember, don’t close it. Your oldest credit card actually plays into your credit score. My oldest card is three years old… this gave me a D on my credit report. Not good.

Total Accounts

How many credit lines do you have open? Over the years, I have had eight lines open, but this actually isn’t enough! In order to get an “A” rating, you have to have more than 22 lines open! I’m certainly not saying that you should finance everything under the sun, but maybe those TJ Maxx and Kohl’s credit cards aren’t so bad. Keep those lines open and you will see your credit score rise.

total accounts

Credit Inquiries

The more hard inquiries you have on your credit score, the lower your score will be. Don’t worry by the way, the CreditKarma.com lookup doesn’t count against your score. It’s a soft inquiry. If you have zero hard inquiries in the last six months, your score will likely be an “A”.

Derogatory Marks

These are accounts in collections, liens, bankruptcies, and civil judgments. These have a high impact on your credit score, and they are terribly difficult to get rid of. Quite often, it can take 7 to 15 years to be cleared of these marks! Avoid them at all costs if you want to have a good credit score.

Just by paying attention to this site for a couple of months, I have raised my score by 32 points! Good luck to you and your credit score!

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AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

9 Comments

  1. Paying on time and knowing how much you can spend are two of the simple yet effective way to fix your credit score.

    • Good observation Mark. Most of the good things you can do for your credit are very simple, and it’s just about being responsible with your finances.

  2. Its a bit exasperating looking at some of the factors considered in setting a credit score. For lack of a better argument, its as if they are encouraging one to drown in credit (22 lines of credit open…thats like an invitation to some serious debt 🙂 )
    Still, I think you do raise some key points…a credit score has become sort of a necessary evil, doing what it takes to improve and maintain it at safe levels surely helps when it comes to securing a loan and for financial well-being.

    • I couldn’t believe that either! 22 lines of credit sounds like a ton! But, if you shop at Target quite a bit, you may as well get the Target card. The same thing goes for TJ Maxx, etc. etc. Ha, but I am so used to saying no to those cards that I can’t get myself to say yes! Maybe one of these days… 😉

  3. CreditKarma is indeed a great resource! I think the best way to improve your credit score is to vow never (or never again) to have a late payment. That is the biggest portion of your credit score 🙂

    • Thanks for the comment Lance! Paying your bills on time is definitely an important thing when it comes to your credit score.


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