How to Improve Your Credit Score by Focusing on Payment History and Reducing Credit Card Debt

November 10, 2014

Credit ScoreOne of the things that many consumers are obsessed with today is a better credit score. After all, your credit score influences more than whether or not you qualify for a mortgage, or whether you get the best interest rate on an auto loan. Your credit score can also impact the insurance premium you pay, or what happens when you sign up for cell phone service.

There are all sorts of “tricks” out there for improving your credit score, but really it just boils down to a couple of basics:

  1. Manage your payment history
  2. Pay down credit card debt

If you make payments on time and pay down your credit card debt, you will likely have a decent enough credit score to accomplish just about anything you want.

Payment History and Your Credit Score

Most credit scoring models heavily weight your payment history. “Payment history accounts for 35 percent of a consumer’s FICO credit scores,” says Michelle Black, a credit expert at, a credit education and restoration program.

This means that if you want to get off to a good start, you need to make your payments on time. If you make all of your loan payments on time, they will be reported positively to the credit bureaus. Missing a payment, or paying late, can mean a lower score. The longer you miss payments, or the more late payments you have, the bigger the effect on your score. One late payment isn’t going to be the end of the world, but there is a cumulative effect once you start piling up the late payments and missed payments.

Even your non-credit payments can impact your credit score. While making your utility payments on time won’t have a net benefit to your score, missing your payments can be negative. Your company can report the missed payments to the bureau, or turn your account over to collections, which is viewed negatively and can drag on your score.

Credit Card Debt

However, it’s important to note that the amount of your credit card debt can also have a big impact. Credit utilization accounts for about 30 percent of your FICO score, and if you have a high ratio of credit used to your available balance, it can mean a disappointing score, even if you make your payments on time.

“Paying down credit card debt is the single most actionable way for a consumer to see an improvement in their credit scores,” says Black.

Many credit experts suggest that you keep your revolving credit card utilization to less than 50 percent – and it’s ideal if you can keep it to less than 30 percent. This means that if you have available credit lines on your cards amounting to $5,000, you should try to keep the amount that you carry to $2,500 (50 percent), or to $1,500 (30 percent). If you want to see a solid improvement in your credit score, paying down high credit card balances can be one of the most effective ways to go about it.

In any case, maintaining a good credit score isn’t about sudden moves. Over time, you are likely to see the best results if you practice good financial habits, keeping your revolving credit balances relatively low, and making sure that you make your credit payments, and other bill payments, on time.

Do you need to improve your credit score? How are you going to go about doing so? Leave a comment!


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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One Response to How to Improve Your Credit Score by Focusing on Payment History and Reducing Credit Card Debt

  • Stephen Brian

    Amazing Article. Hardly Recommended you for your helpful writing. Hope we will get More and More Helpful Article from you. Thanks.