On time Payments

On time payments make up the largest portion of your credit score. The best way to raise your credit score is to consistently make on time payments. Missing even one payment, or making even one late payment,  will significantly lower your credit score as soon as the missed or late payment appears on your credit reports. If you do make a mistake and miss a payment, though, don’t panic. Your credit score will go down quickly and go up again slowly as your mistake falls further into the past. Most mistakes will disappear from your credit report after seven years.

Credit Utilization Ratio

Credit utilization ratio refers to the difference between the credit you are using and the credit you could be using. It’s the second-most important part of your credit score. One of the best ways to increase your credit score is to use credit sparingly and to pay it back as quickly as possible. One of the best ways to lower your credit score is to use too much credit and take a long time to pay it back.

Credit cards give us permission to borrow money from them at any time just by swiping the card. This privilege isn’t unlimited, though. Your credit limit is the largest amount of money you’re allowed to borrow from a credit card at any time. When you’ve reach this limit, you won’t be allowed to borrow any more money until you’ve paid back some of the money you’ve already borrowed. We call this “maxing out” your credit card. This will lower your credit score, though it’ll rise again as quickly as you pay back the money you borrowed.