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Bottom Line Up Front

  • From the number of credit cards you apply for to how often you pay bills on time, your credit score can change based on how you spend and manage your money.
  • A high credit score can help you make big purchases and get loans at lower interest rates. 

Time to Read

4 minutes

April 22, 2022

Ever wonder how lenders choose who to give credit to or who to approve for new lines of credit or low-interest rate loans? A big part of the answer is your credit score. Your credit score is a number usually between 300 and 850 that shows your credit risk, or how likely you are to pay back money on time. Credit card issuers, insurers, landlords and even utility companies look for a good credit score and may ask for your credit report to help decide to give you a loan, rent you a home or approve a purchase. 

Boost your credit score

Credit score factors are things you do that can make your credit score go up or down. Here are the 5 factors you need to know to build good credit. 

  1. Late or missed payments. One of the most important factors in setting your credit score is your payment history. In fact, it makes up 35% of your FICO®* Score (a common credit score formula used in the U.S.). The first thing lenders want to know is if you tend to pay your credit accounts on time.

    What you can do:
    Make monthly payments early or on time. Pay in full if you can. Pay more than the minimum on cards with high balances so you can pay down debt. 
  2. Not using credit. Using cash keeps you from credit card debt, but you have to use a line of credit responsibly in order to prove to lenders that you can do it. A strong credit history can boost your credit score while no credit history can hurt your score.

    What you can do:
    If you have no credit at all, consider starting with a secured credit card with a credit limit based on your savings account. Avoid late payments and missed payments to build a credit history and raise your credit score.
  3. Having just one type of credit account. Credit accounts can be credit cards or installment loans like auto loans or student loans. Your credit score may be higher if you have more than one type in your credit mix. This shows lenders you’re able to manage different types of credit accounts. 

    What you can do:
    You don’t want to open new accounts you won’t use or open too many new credit accounts in a short period of time. You do want to open a new credit account—like a car loan—if you need it as it will add variety to your credit mix. 
  4. Not checking your credit report. Mistakes on your credit report can lower your score. According to a Federal Trade Commission study, 1 in 4 Americans has errors on their credit reports, and 5% of Americans have errors that could lead to higher rates on loans or insurance. 

    What you can do:
    Get your free credit reports every year at There, you can request your credit reports from each of the 3 national credit bureaus: Experian, Equifax and TransUnion. (Note: Asking for your own credit report is a “soft inquiry” that doesn’t change your credit score. But too many “hard inquiries”—credit inquiries made when you apply for credit—can hurt your score.) Tell the credit reporting agencies in writing if you see anything wrong on your credit report. 
  5. Closing a paid-off account. You may want to close an account if you’ve paid off a credit card balance in full. But, if you still owe on other accounts, it could hurt your credit utilization rate (how much available credit you’re using). 

    What you can do:
    Try to keep your credit utilization ratio under 30% (i.e., if your available credit is $1,000, try to keep your balance below $300).

A good credit score can help you save money and meet your financial goals. Navy Federal is here to help you build or improve your credit. Try using Navy Federal’s Mission: Credit Confidence® Dashboard to monitor and see how different actions could affect your credit score.

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*FICO is a registered trademark of the Fair Isaac Corporation.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.