Your credit score is a crucial factor that affects your ability to borrow money, get a mortgage, or even rent an apartment. Understanding how credit scores work and how to improve them can significantly impact your financial well-being.

Credit scores are calculated based on five factors: payment history, credit utilization, length of credit history, types of credit, and recent inquiries. Payment history is the most important factor, so always aim to pay your bills on time. Credit utilization refers to the percentage of your available credit that you’re using; keeping it below 30% is ideal.

Improving your credit score involves maintaining a good payment history, paying down debts, and avoiding opening too many new accounts at once. It’s also essential to regularly check your credit report for errors, as inaccuracies can negatively affect your score.

By understanding the factors that influence your credit score and taking proactive steps, you can improve your score over time, leading to better financial opportunities.