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The holidays are just around the corner. You may be thinking of all the people you need to buy gifts for. When most people do their holiday shopping, they don’t always think about how their spending impacts their credit scores.

However, A good credit score is important to your financial health and your life. Good credit improves your odds of getting approved for a loan, finding an apartment, and can even impact your job prospects.

So as you shop this holiday season, why not give yourself something that you’ll need. Why not give yourself the gift of a good credit score?

What is Your Credit Score?

Many people do not understand how a credit score works, or where they can get one.

Your credit score is a mathematic formula that estimates how likely you are to pay back money that you borrow, whether it’s a loan or a line of credit. The lower your credit score, the more likely you are to default on a loan.

The inputs into this formula are what is important. If you do the right things, then you will have excellent inputs and can give yourself a great credit score.

The next few sections will discuss specific ways you can improve your credit score.

Payment History

The most important way to maintain a good credit score is to always pay your bills on time. Your payment history makes up 35% of your credit score.

If a lender sees too many missed or late payments, then they could deny your loan application. Making your payments on time each month can really boost your credit score.

Credit Utilization

Credit utilization is also extremely important. This is the amount of credit you have and how much of it you are using. This makes up 30% of your credit score.

If you use too much of your credit limit, this can raise a red flag. You want to keep it under 30%, but even lower is better. Plus, if you pay off your balances, then you won’t pay interest. This is another advantage of keeping a low credit utilization.

Age of Credit

Your credit age makes up 15% of your credit score. Credit age is something that mostly affects younger people or those who have never had credit before.

Basically, the number of years that you have had a credit history will impact your score. If you have just received your first credit card, then you will likely have a lower score. The opposite also applies. If you have had a strong credit history for the past 30 years, then you’ll likely have a higher credit score.

Number of Credit Inquiries

Another factor important to maintaining a good credit score is how many inquiries you have. The more inquiries you have, the more it will impact your credit.

Credit inquiries is that they only make up about 10% of your credit score. Luckily, this aspect of your score is easy to control. Only apply for credit cards or loans when you feel that you need them. Do not apply for credit cards just because you want them.

You may also want to avoid applying for cards or loans that you have a low likelihood of receiving. All that does is lower your credit score without any actual benefit.

Credit Mix

The final factor in maintaining a good credit score is your credit mix. This makes up 10% of your score. Lenders and credit card issuers want to see you have multiple types of credit accounts. Doing this shows creditors that you have the ability to manage different types of accounts at the same time.

For instance, a good credit mix might look like a few credit cards, a home loan, and an auto loan. If you can make payments on time for all of those, then creditors are more likely to trust you.

Where Can I Get My Credit Score?

So you’ve decided that you want to give yourself this wonderful gift this year, but you might be wondering “where can I get my credit score?” Credit.com has you covered. We offer two free credit scores that are updated every 14 days. This also comes with a Credit Report Card which is a summary of your credit report. This summary shows how you are doing with each factor of your credit score and offers tips on improving. Sign up with Credit.com today to see where you stand and give yourself one of the best gifts possible – a great credit score!

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