How to Improve Your Credit Score: A Practical Guide

Your credit score might be the most important piece of your financial life, shaping what you can afford and what options are available to you. It determines whether you’ll get approved for a mortgage, what interest rate you’ll pay on a car loan, and if you can rent an apartment.

It’s a simple three-digit number between 300 and 850, and it quietly dictates your financial life — for better or worse. If you think of it as something you tend to, like a slow-growing plant, it will later yield untold positive benefits. But the downside is that it’s easily damaged, and you can kill a good credit score in a hurry.

According to myFICO, credit scores are used by 90% of lenders, and five factors determine your overall credit score:

• Payment history is the biggest one, accounting for 35% of your score
• Credit utilization takes up 30%, measuring how much of your available credit you’re using
• The length of your entire credit history represents 15%
• Your portfolio of credit accounts makes up 10%
• New credit inquiries make up the last 10%, tracking how often you apply for new accounts

Payment History: The Foundation of Your Score

Payment history dominates your credit score because lenders typically want to know one thing: whether or not you’ll pay them back. A good credit score features years of steady, on-time payments. Unfortunately, one missed payment can drop your score by dozens of points, and late payments can stay on your credit report for up to seven years.

If you’ve missed payments in the past, the damage isn’t permanent. And you can start fresh today. Set up automatic payments for at least the minimum due on every one of your accounts. Pay the full balance when and if you can. Most of all, keep up with those consistent minimum payments. It matters more than occasional larger ones when money is tight.

Credit Utilization: Keep Your Balances Low

Credit utilization tracks how much credit you’re using compared to how much you have available. If you have three credit cards with a combined $15,000 limit and you’re carrying $10,000 in balances, your utilization is 67%, which is high enough to concern lenders. Financial advisors commonly recommend staying below 30%, but even better if you can get that percentage point even lower. Think of the 30% mark as the maximum amount.

If you’re utilizing more than that, you’re not alone — especially if you’re under the age of 60. On average, younger generations use more of their credit, while only baby boomers and silent generation are currently able to use less than 30%. Be strategic in how you pay down debt, by focusing your extra payments on cards that are closest to their limits. Paying down a maxed-out card to 50% utilization helps your score more than paying down a card that’s only being used at 20%.

Length of Credit History and Credit Mix

That first credit card you opened years ago? Keep it. Closing old accounts shortens your credit history and reduces your total available credit, which increases your utilization ratio. You can build credit by keeping old accounts active with occasional small purchases that you pay off immediately.

While your credit mix does play a much smaller role, it still matters. If you only have credit card accounts, you’re going to have a much more narrow financial profile than someone managing credit cards with an auto loan and a mortgage. Don’t take on debt just for the sake of your credit score, but when you do need to borrow, know that different credit types will strengthen your profile. Car loans and mortgages show you can handle structured repayment schedules.

Managing New Credit Applications

Every credit application you fill out triggers a hard inquiry that can temporarily drop your score by a few points. Multiple inquiries in a short period will raise red flags about your financial stability.

There is one exception to this rule, and that’s rate shopping for a major purchase, like a car or a house. Credit scoring models will recognize that you’re comparison shopping if your applications are compressed into a 14- to 45-day window.

Check Your Credit Reports Regularly

You can keep an eye on your credit score by checking it regularly, and federal law entitles you to one free credit report annually from each of the three major bureaus: Equifax, Experian, and TransUnion.

You’ll want to make sure you check all three, because lenders don’t always report to every bureau, so information varies. Review them for errors, like incorrect late payments, accounts that aren’t yours, or outdated information. Disputing inaccuracies can quickly boost your score once those errors are corrected.

The Timeline for Improvement: What to Expect

If you’re actively working on improving your credit report, it’s important to remember that it can take a month or two to see the impact of each small effort. If you keep your balances low and consistently make your payments on-time, you’ll begin to see significant increases in your score over the long term. People starting with lower scores often see faster progress. Jumping from 580 to 650 happens quicker than climbing from 720 to 750.

Taking everything into account, your credit score reflects habits more than isolated actions. Sustainable improvement comes from building solid routines around timely payments and moderate credit use, and taking these three simple steps:

• Set up automatic payments
• Keep credit utilization low
• Check your reports for errors

At First Utah Bank, we understand your credit score is more than a number. It’s a tool that opens doors to homeownership, reliable transportation and financial flexibility. Whether you’re rebuilding your credit or reaching for that next tier, we’re here to support you with personal banking services that can help you build a positive history and improve your standing.