Ah yes! The mythical creature that is credit! As awestruck as you may be with the inner workings of this number, there are a few principles and areas to understand that are sure to improve your knowledge and help to bring up your score. 

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Let's talk about the 5 Factors of Credit and give them a percentage of their impact on your credit score.

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Amount Owed (35%): Amount owed is how much you owe on each account and also for the amount you owe on the total percentage available for you to borrow. A good goal is to use less than 10% of your credit limit. Of course you can use more but you want to make sure that you keep less than 10% of your credit limit active for your billing cycle. This alone may be the most important impact and factor for building your credit. For example, if you have a $10,000 limit between three credit cards, you would want to use less than $1,000. Why? Well if you use $9,000 of your credit line every month and pay it off on time for the billing cycle, it shows no improvement and that you need to use 90% of your credit limit. Now, If you used $9,000 and paid $8,000 the next week and left the remaining $1,000 on there until your bill is due your credit score should improve because you are paying it ahead of time and therefore in control. Furthermore, if you can keep your credit use lower than 10% it will be more beneficial. I use my credit card and leave a balance on it so it shows up for the credit card companies. I keep this balance under 10% and always pay it off before my bill is due. My credit score improved 90 points in one year with understanding this and a few other tips! 

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Payment History (30%): How many payments you have made on time. Also, if you have had late payments, how many and how late were they. A single late payment will impact your credit, but it is several late payments that will severely impact your credit score. It is very important to stay on top of paying on time. Consider what a lender would think of your ability to pay a mortgage on time if you have several late payments on your credit report.

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Credit History (15%): This is how old your lines of credit are; it is the average age of all the accounts you have open. So as much as it may make sense to have a new card, it is also important to have cards that are older and still used as it shows you are able to maintain a good credit relationship over time. 

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Type of Credit (10%): What kind of debts do you have? Variety is the spice of life and it is true in credit as well. Having loans of different varieties can be helpful to your score. I am not suggesting buying a new car or getting student loans to have different credit, but having a variety in good standing will have a positive impact on your score. If you have one credit card and no other loans, consider taking out a new card from a different company and using it for one or two things, such as gas or food. Although this will reduce the average age of your credit, it will start a new relationship and add variety to your credit report. 

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New Credit (10%): How many new lines of credit you have and also how many reports or hard pulls you have had. When you apply for a new card or an auto loan, they will pull your credit which will negatively impact your score in the short term, while having a new account in good standing will improve it over time. This becomes problematic if you apply for several accounts in a short period, especially if you are denied for several credit cards. Be mindful that if you are taking out a new card to roll another balance on it for the grace period without interest, you may be better off taking a loan from your bank to pay off the debt at a lower percentage rate and getting rid of your card all together. If managing your credit card use is tough, talk to your bank about this option. As much as it feels shameful, it may change your life for the better! 

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****You need to use your credit cards to improve your score! Having a card and not using it will not improve your score. 

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You can do a free credit report once a year from each of the big three credit bureaus, Experian, Equifax, and Transunion. That means you can do one from each company every four months. This is an excellent way to see the full report and make sure that the reports are accurate. Have you ever requested your credit report? 

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To do so, visit annualcreditreport.com

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For constant monitoring and encouragement, you can use Credit Karma. Using this website will not behave like a hard pull on your credit so you can rest assured that keeping an eye on it will be beneficial over the long term. At first you may find that it reminds you of your "low" score, but with momentum you would be surprised where your credit goes!