Building Your Credit Score

Benjamin Haas |

You’ve been saving, trying to be responsible with your credit card and you’re about to take a big step: beginning your search for renting an apartment and/or buying a home! The loan companies and landlords are asking for a credit score check and you may be wondering, what makes up a credit score and why do they care about it? Read below on what makes up a credit score, why it’s important, and some ways to improve your score.  

What is a credit score? 

A credit score can range from 300-800 and represents the likelihood of you paying off borrowed money and bills. The higher the credit score, the better! 


What makes up a credit score? 

There are five factors that make up someone’s credit score:  

  • Payment history (35%) - Paying consistently on time will help improve your credit score 

  • Amount you owe (30%) - The lower the outstanding debt you have, the higher your credit score will be 

  • Length of credit history (15%) - A long credit history can positively impact your score 

  • New credit you apply for (10%) - your credit score goes down every time you apply for a new line of credit. It typically impacts your score by about 5 points and can be brought back up over time 

  • Types of credit you use (10%) - Revolving debt or installment debt can positively impact your score but isn’t necessary to have different types to have a high credit rating. 


Where can I check my credit score? 

Credit Karma is a highly reputable and free website that you can check out your credit score. Just be careful not to fall for any of the ads that may want you to get new credit cards or other loans! 


What's a hard inquiry? 

A hard inquiry occurs when a lender or company reviews your credit before approving you for a loan or new credit card and will negatively impact your credit score. 


Should I pay off my balance every month? 

It’s always a good idea to pay off your monthly credit balance in full if you’re able to! This will make sure you don’t accrue any interest on the balance as well as help keep your utilization rate low (which impacts your credit score as mentioned above!).  


How many credit cards should I have? 

There isn’t a definite answer to this but having 2-5 credit cards is a way loan companies can verify the different categories above. Having too many cards can lead to juggling multiple payment due dates while having too few may be hard to gauge the responsibility of the owner if you don’t have a long credit history.   


Are there other ways to help build my credit score? 

Any loans that have consistent payments, such as student loans and car loans, are another way to help boost your credit score! As mentioned above, making sure you pay on time will help increase your score over time as it shows you’re responsible to repay your debts.  


Building credit is a great thing but also comes with responsibility. Remember to stay within your means and don’t view credit cards as “free money.” If you have questions about your credit score, feel free to reach out as we’d be happy to provide deeper education.  




Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice. 

All content and information is for informational and educational purposes only. 

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