Skip to Content
Parents camping with their two children symbolizing that they have a lot of financial planning to prepare for in the future
Planning your financial future

Building a strong credit score

Understanding what impacts your credit score can go a long way toward helping you improve it.

Your credit score is much more than a number - it's an important reflection of your financial planning fortitude and future opportunities. Building your credit score is important. If you have a poor credit score, like a 523, you'll pay more interest than most people when you apply for loans. In some cases, you may not be able to qualify at all. On the other hand, if you have a good score, such as 745 for example, financial opportunities abound.

According to, there are five major components that make up your credit score:

  1. Payment history (35%)
  2. Amounts owed (30%)
  3. Length of credit history (15%)
  4. New credit (10%)
  5. Credit type (10%)

With this framework in mind, below are five tips to help build your credit score and keep it strong, as an important component in your overall financial plan:

Consistently pay your bills on time

As you can see above, your payment history may account for 35 percent of your overall credit score. To ensure you don't miss a payment, and that you stay on track with your financial plan, use online bill pay tools to schedule your payments in advance.

Use debt responsibly

You might have grown up believing that debt is bad. However, from a credit score and lending perspective, responsible debt management is good. Lenders want to see a positive track record of paying off loans. They also want to see that you have the financial discipline to not use all of the credit available to you. To optimize your score, use 30 percent or less of your available credit.

Mind the length of your credit history

FICO research has shown that those who apply for many accounts within a short amount of time are at the greatest risk of overextending themselves. Pace yourself. Be cautious about for applying for credit too often. Keep accounts open even if you're not using them to help establish a longer credit history.

Beware of canceling accounts

Account utilization is part of your credit score history. If you close an account because you're not using it, you could inadvertently damage your credit score by lowering your total available credit (and therefore increasing the percentage of credit used) or by shortening the length of your credit history.

Maintain a few types of credit

Generally, lenders like to see that you have experience with all types of credit, from mortgage loans to installment loans and credit cards. Having credit cards and installment loans with a good credit history can raise your score according to FICO.

Want to monitor your credit score? Consider signing up with one of many credit monitoring services. You can regularly check in on your score and watch the impact as you pay off debt, build credit and fulfill other aspects of your financial plan.



Arrows linking indicating relationship

Related Articles

Two young adult males that resemble enough to look related having a conversation.

Millennials seeking financial advice

Learn more
Man with a beard researching something on his computer.

Let credit cards work for your budget

Learn more
 Man using credit card to pay and get credit card rewards

Get rewarded for your spending

Learn more

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.