5 Things to Keep an Eye on if You Want to Raise Your Credit Score

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How is it that three little numbers can say so much? Your FICO® Score -- the most commonly used credit score in the U.S. -- tells potential lenders how well you've managed credit in the past. Based on a three-digit number between 300 and 850, lenders determine how long you've had access to credit, whether you pay bills on time, and other credit behaviors that factor into their lending decisions.

If your current credit score isn't as high as you would like it to be, take heart. There are steps you can take to give it a boost. It's all about knowing what to keep your eye out for.

1. How faithfully you pay your bills

Whether you're applying for a credit card or taking out a home mortgage, you're asking for a loan. As the lender, a creditor wants a peek into how you handle personal finances . The higher your credit score, the more confident the lender is that you'll pay them back on time and in full.

Of course, they don't have a crystal ball, so the best they can do is look at how well you've paid bills in the past. Do you have a history of missed payments, or are you good about paying your bills when they're due?

If you want to raise your score: Prioritize making payments on time and always pay the total amount you owe for the month. One way to make it easier on yourself is by setting up automatic payments. That way, you don't have to worry about a bill slipping through the cracks while you're busy.

2. How much credit you take on

Credit utilization represents 30% of your FICO® Score. This refers to the amount of debt you're currently carrying vs. how much credit you have. The more debt you have, the more creditors worry that you might be in over your head and unable to repay them.

If you want to raise your score: Keep your credit utilization ratio as low as possible. Lenders calculate your total credit utilization by dividing your current balance by your total credit limit. Let's say you have a credit card with a limit of $5,000 and currently carry a balance of $1,000. The math would look like this:

• $1,000 / $5,000 = 0.20

In other words, your credit utilization ratio is 20%.

Of course, lenders don't check your credit utilization on a single card, but instead check how much you're using of all available revolving credit.

While the "acceptable" ratio varies by lender, it's generally accepted that you should keep it below 30%. However, the lower your ratio, the better. Lenders like the idea that you have access to credit, but are very careful about how you use it.

3. How often you apply for new credit

Lenders get antsy if they believe you're running around town, taking out as much credit as possible. Again, it raises a concern that you may get in debt over your head.

If you want to raise your score: Be careful about how frequently you apply for credit. If you're shopping for a specific loan (like an auto loan), limit your loan shopping to 14-45 days. This tells the credit bureaus that you're shopping around for a single loan and don't intend to take out more than one.

4. How long you've had credit

Your length of credit history is worth 15% of your credit score. It's not that creditors believe you'll be better about paying bills if you've had access to credit for many years; it's just that you have a longer history for them to study. The more they have to look at, the more confident they feel that they can make a fair decision.

If you want to raise your score: In addition to paying your bills on time, keep old accounts open so they have time to age. For example, if you have a credit card you rarely use, don't close it. If you have a line of revolving credit -- like a credit card or home equity line of credit (HELOC) -- feel free to focus on paying it off , but leave the account open for as long as possible.

5. The type of credit you apply for

People are often surprised to learn that the mix of credit they carry matters. In fact, it's worth a total of 10% of your score. Let's say that the only debt you have is two car loans. While creditors can see how well you make a car payment, they don't know anything about how well you'd handle a credit card, mortgage, or other type of debt.

If you want to raise your score: Be conscious of the type of debt you apply for. Whenever possible, mix it up. Having a credit card, personal loan, and auto loan provides a better mix than five credit cards.

Slow and steady is the mantra when it comes to raising your credit score. Ultimately, what it comes down to is making small decisions that will enhance your credit.

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