Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.
- Payment history (35%) — Your payment history shows whether you’ve made your loan and credit payments in the past. The better your payment history, the better your credit score. On the other hand, a late or missed payment can cause your credit score to decline.
- Credit utilization (30%) — Your credit utilization refers to the percentage of your available credit that you’re using. You can find it by dividing the amount of your revolving credit that you’re using by your total revolving credit limits. Lenders generally prefer your credit utilization to remain below 30%.
- Length of credit history (15%) — This is the average age of your credit accounts, as well as the age of your oldest and newest accounts. It also shows how long it’s been since you used certain accounts.
- Credit mix (10%) — Your credit mix consists of the different types of credit on your accounts, including credit cards, lines of credit, and installment loans. You don’t need to have one of each type of credit, but having more than one type can be helpful for your credit score.
- New credit (10%) — New credit refers to any new accounts you’ve opened. Opening multiple accounts in a short period of time can be a bad sign to lenders as it could indicate that you’re struggling to manage your debt.
Ways to improve your credit
If your credit score isn’t quite where you’d like it to be, you can do several things to boost your score before you apply for a personal loan. Some of these may yield quick results, while others will take a bit longer:
- Check your credit report. Checking your credit report can give you an idea of where you stand and what might be keeping your score low, including missed payments. If you find errors on your credit report, you can dispute them with the appropriate credit bureau. Having errors removed from your report can boost your score.
- Pay your bills on time. Your payment history is the most important factor that determines your credit score, so it makes sense that simply paying your bills on time, every time, is the best way to boost your score in the long run.
- Pay off revolving debt. Paying off credit cards and other revolving debt can reduce your credit utilization, which can then increase your credit score.
- Increase your credit limits. In addition to reducing your debt to improve your credit utilization, you can also increase your credit limits. You may be able to do this by calling your credit card company or requesting an increase through your online account.
- Avoid applying for new credit. Applying for new credit right before you apply for a personal loan can result in a small hit to your credit score, which can temporarily lower your score by a few points.
If you’re ready to apply for a personal loan, Credible lets you quickly and easily compare personal loan rates to find one that best suits your needs.
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