Lesson P102.4 · Personal Finance 102: Credit, Debt and Setbacks
Raise your score: the habits that move it
5-minute read · Figures checked October 2026
Photo: Kaboompics / Pexels, Pexels License
The short answer
Pay every bill on time and keep your balances low. Those two habits make up almost two-thirds of a FICO score: payment history is 35% and amounts owed is 30%. After that, apply for new credit rarely and give it time. None of it takes new debt.
The habits, by how much they count
| Habit | FICO factor | What to do |
|---|---|---|
| Pay on time | Payment history (35%) | Autopay at least the minimum on every account |
| Owe less | Amounts owed (30%) | Pay balances down; stop using any card that carries a balance |
| Give it time | Length of credit history (15%) | Keep paying on time; the months add up |
| Apply rarely | New credit (10%) | Apply only when you truly need to |
| Leave the mix alone | Credit mix (10%) | Don't take on a loan to change your mix |
On time, every time
Payment history is the biggest piece, and one late payment can sit on your report for years. Most negative information can stay seven years.
Autopay is the best guard you have. Set at least the minimum on every account so a slow week, a rain-out or a busy Friday never makes you late. On a card you pay in full, autopay the full statement balance. If money's tight, call the lender before the due date, not after.
Owe less on what you have
Amounts owed is next. FICO looks at how much you owe and how much of your available credit you're using. Using a lot of it can signal that you're stretched thin.
Example: Lena owes $2,400 on a card with a $3,000 limit. That's 80% of the limit. She stops using the card and pays it down to $600, which is 20%. Same card, same limit, a much smaller balance. Made-up numbers.
Closing a card can lower a score for a while, because whatever you still owe now sits against less available credit. If you're cutting up cards and closing them (see the box below), expect that dip and keep paying everything on time.
New credit, time, and what doesn't count
Opening several accounts in a short time reads as a risk. Think of the store card at checkout for a one-time discount, three times in one month. Apply only when you truly need to.
The age of your accounts counts for 15%. Time does this part, and nobody can rush it.
For now, myFICO says buy now, pay later loans don't affect FICO scores, because the three big bureaus don't pass that information into them yet. That could change. Either way, each plan is a payment you owe, and several due the same week can wreck a budget.
Some things don't count at all: your income, your job and your employer. Checking your own credit doesn't hurt your score.
Different approaches
Where respected teachers differ
Building a credit score or living without one. Dave Ramsey teaches you don't need a credit score; a debt-free life ends with no score, and a mortgage lender can verify you by hand using 12–24 months of on-time bills. Many landlords, utilities and insurers check credit, so others suggest building a score without paying interest. Either way, never borrow just to raise a score.
Credit cards for people who pay in full. Everyone agrees: if you carry a balance, stop using the card and pay it off. Dave Ramsey teaches that nobody needs a credit card and that rewards are designed to make you spend more. Others say a card paid in full every month is fine. If you keep one, treat it like a debit card: never charge more than you have in the bank, and autopay the full balance.
Your Move
Do this week
- List every account with a due date: cards, loans, phone, rent.
- Turn on autopay for at least the minimum on each one. On a card you pay in full, autopay the full statement balance.
- Pick one card balance and pay it down this week. If you've already chosen a payoff method (P102.6), follow it. No balances? Skip this step.
- Stop applying for new credit for now.
Log it: Set autopay and paid down a balance.
Common questions
How fast will my score go up?
There's no set timeline. On-time months and lower balances add up, and a late payment or a run of new applications sets you back. Be wary of anyone who promises a quick jump.
Does my income affect my credit score?
No. FICO scores don't use income, though a lender may ask about it when you apply.
Should I close my old cards?
Closing a card can lower your score for a while. Some people close cards on purpose as part of getting out of debt for good; respected teachers differ here, as the box above shows. Either way, keep paying everything on time.
Watch out for
- Paying anyone for a "quick score boost." Credit repair companies can't legally charge before they help you, and no one can legally remove accurate, current information.
- Buy now, pay later plans stacked on top of each other.
- Store cards opened at checkout for a one-time discount. Each one is a new application.
Free help
- AnnualCreditReport.com, or call 1-877-322-8228, to check your reports free every week
- National Foundation for Credit Counseling (NFCC), a network of nonprofit credit counseling agencies: 877-360-6322
- Federal Trade Commission (FTC): Fixing your credit FAQs
Free practice
Lesson check
5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.
This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.
Sources
- myFICO: What's in my FICO Scores?
- myFICO: What's not in my FICO Scores
- myFICO: Does Buy Now Pay Later Affect FICO Scores?
- Ramsey Solutions: Do I Need to Use a Credit Card?
- Ramsey Solutions: Can You Buy a House With No Credit?
- Federal Trade Commission: Fixing Your Credit FAQs
- Federal Trade Commission: Free Credit Reports
All lessons in Personal Finance 102: Credit, Debt and Setbacks →