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Your credit score is one of the most influential measures that determine whether you’ll be approved for loans and credit cards. A number of factors go into calculating a credit score, including your history of on-time payments and how much debt you owe as well as what types of credit you have and how long your credit history is.

Knowing what affects your credit score is the first step to ensuring your score stays high so you can qualify for financing opportunities when they arise. We’ll address all your questions about what affects your credit score, as well as how to keep track of it.

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Why a Good Credit Score Is Important

In a nutshell, having a good credit score provides opportunities for you financially and can help you spend less overall on financing. If you want to buy a car, a good credit score can help you secure an auto loan at a low rate. Similarly, having good credit is key to opening a credit card.

Having a bad credit score — generally anything under 500 on the scale of poor to exceptional credit — can limit your financial opportunities. If you have bad credit, you may not qualify for loans that you apply for, or if you do, you may have higher interest rates. You also may not get approved for a credit card, unless it’s a secured card, which requires a deposit and has a low credit limit. A bad credit score could even hamper your job search, particularly if the job involves handling money.

The bottom line is that having bad credit hinders your ability to grow financially, so it’s important to do what you can to maintain a good credit score.

Recommended: 8 Reasons Why Good Credit Is So Important

Recommended: What Is The Difference Between Transunion and Equifax?

5 Factors That Influence Your Credit Score

The first step toward building your credit score is understanding what factors help to determine it. In general, these are the five credit score factors that shape your score:

Factor #1: Credit Utilization

When it comes to what affects your credit score, one of the most important factors is how much credit you have available versus how much debt you currently have. It’s called your credit utilization, and you can calculate this number by dividing your outstanding debts by your total credit available.

Let’s say you have three credit cards with a total credit limit of $30,000. You owe $3,000 in total. So your credit utilization would be:

3,000 / 30,000 = 0.10

Your credit utilization of 10% (you’re using 10% of your total available credit) is great, as lenders generally want to see a utilization rate below 30% to approve a loan application.

Factor #2: Payment History

You might not feel like an occasional late payment on a credit card is a big deal, but it can impact your credit score negatively. In fact, payment history accounts for 35% of your FICO score (the scoring system for the credit bureau Experian).

The easiest way to raise your credit score? Pay your bills on time. Many loans and credit cards will allow you to set up autopay, which is a foolproof way to make sure you never miss a payment.

Factor #3: Credit History Length

You’re not born with a credit history; it has to be built over time. Many college students start the journey by opening their first credit card account. This is a great place to start, though remember that good habits like paying on time and keeping your credit utilization rate down will help build good credit.

And lest you think if you want a new credit card you need to close an old one, you don’t. The longer you have relationships with credit companies, the better your credit.

Factor #4: Types of Credit

While this factor isn’t nearly as important as the others, the types of credit you have can impact your credit score. Having a nice mix of credit — such as credit cards, a home mortgage, and an auto loan — can contribute positively to your credit scores, though it isn’t required.

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Factor #5: Recent Applications

Whenever you apply for credit, whether that’s a car loan or a credit card, there is what’s called a “hard inquiry” on your credit report. If you make several applications within a few days or weeks of one another, it may be seen as derogatory on your report, and your credit score might dip a bit.

Consider your credit needs carefully and try to look for lenders that let you see if you prequalify, since that is considered a “soft inquiry” and won’t impact your credit the same way.

Remember, There Are 3 Main Credit Scores to Consider

While the factors above are what generally affect your credit score, you actually have three different credit scores, each of which may be calculated slightly differently. These three credit scores come from the following three personal credit bureaus that track your financial activity:

•   TransUnion

•   Experian

•   Equifax

Each bureau has its own credit scoring system that it uses to determine your score. Some loans and credit card companies report to one or two bureaus — or even all three — so it’s important to know that your activity may show up slightly differently depending on the reporting agency.

How to Track Your Credit Score

Now that you understand what affects your credit score, it’s your responsibility to stay on top of your score so you know when it changes. Each credit scoring bureau updates scores on a different schedule, but you can expect updates roughly every 30 to 45 days.

There are several places you can check your credit score. Some banks and credit card issuers offer the service free to customers. Additionally, you are entitled to one free credit report a year from
AnnualCreditReport.com , which provides your credit reports and scores from each of the three credit bureaus.

Tracking your score is important even if you don’t plan to take out a loan or open a credit card any time soon. Make sure to regularly review your report to ensure there are no discrepancies, such as a late payment you know you didn’t make, or an open account you closed. If you see anything that is incorrect, contact the credit bureau immediately to get it resolved.

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The Takeaway

Once you understand what affects your credit score, you have the power to improve your score by taking steps such as reducing your credit utilization and paying your bills on time. As you build your credit, you will qualify for better loan offers and interest rates on credit cards, which can empower you to purchase what you need without high expense.

Take control of your finances with the SoFi money tracker app, which allows you to track your spending, set goals, and monitor your credit, all in one place.

Photo credit: iStock/oatawa

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you’re living paycheck to paycheck or just wish there were more wiggle room in your finances, you may want to consider some money-wise tips like budgeting, negotiating your bills, and lowering your debt.

Making your dollars go further may also involve finding ways to help grow the money you do have in the bank (and there may soon be more of that). You’ll learn a dozen smart and simple tactics here.

Simple Ways to Stretch Your Money Further

Read on for money-stretching strategies that may help make it easier to make ends meet, plus have a little bit of extra.

1. Tracking Your Money

If you want to do more with your money, it helps to first figure out what you are currently doing with your money.

You may have a good sense of your fixed monthly expenses (such as rent/mortgage, car payments, groceries, student loans), but smaller everyday expenses have a tendency to slip through the cracks — yet, nevertheless, add up.

A good exercise is to track how much you’re actually spending each day (that includes every cash/debit/credit purchase you make, plus every bill you pay) for a month or so.

You can do this by carrying around a notebook or saving all of your receipts and putting them into a spreadsheet on your computer. There are also a number of apps that can make the process of tracking your daily spending easy.

This can be an eye-opening exercise. Spending is so frictionless these days, many of us really don’t have a handle on how much money we are actually spending.

Seeing it all in black and white can help you think twice before buying something nonessential, and help you start becoming much more intentional with every dollar.

2. Setting up a Budget

Once you’ve done the work of tracking your monthly expenses, you may next want to compare this to how much money (after taxes) is coming in each month.

If you are consistently spending more than you are bringing in, you may want to set up a budget to help you get these two numbers better aligned.

The process requires grouping all of your spending into categories, seeing where you may be able to cut back, and then setting up some monthly spending parameters.

There are a number of tools and apps that can help you create — and stick with — a household budget, but even just keeping a ledger or a basic spreadsheet can help you gain more control over where money is falling through the cracks.

While the idea of living on a budget may sound like a drag, the truth is that planning how you want to spend your money can often lead to having more money to spend on the things you want. Plus, there are many types of budgets, and one of them probably suits your personal and financial style well.

A budget can also help guide your money toward short- and long-term financial goals like an emergency fund, a down payment for a house, and retirement savings.

3. Paying Bills on Time

Knowing when your bills are due and paying them on schedule could save you money in a few different ways.

First, it can help you to avoid paying interest and late-payment fees.

Second, It might also maintain your credit score. A good credit score is important because it can help you qualify for the best interest rates on credit cards and loans.

And the less money you have to pay in interest, the faster you’ll be able to pay off debts – and the more money you’ll have to spend on other things.

4. Negotiating a Better Deal

Some of those recurring bills (like cable, internet, your cellphone, car insurance) may not be set in stone.
It might take some research — and a little nerve — but you may be able to negotiate for a lower rate from some of your service providers, especially if you’re dealing with a company that’s in a competitive market.

Before you call or email a business or provider, it can help to know exactly how much you’re paying for a service, what you’re getting for your money, and how much the competition is charging for the same or similar service.

It’s also a good idea to make sure you are communicating with someone who actually has the power to lower your rate and, if not, ask to speak with someone who does.

It may also be helpful to let a provider know that if they can’t do better, you may decide to switch to another company (and you might).

You can also try to talk your way to a better deal with other expenses, such as negotiating medical bills.

5. Ditching Expensive Debt

Another way to help make your money go further is to spend less on interest payments on debt.

If you can pay down that debt, you could use the money you’re now throwing away on interest to pay other bills, build an emergency fund, invest for the future, or save for a vacation or some other goal.

Reducing debt is easier said than done, of course — but choosing the right debt reduction strategy may help.

•   Since credit card debt typically costs the most in interest, you might consider chipping away at these debts first or, if possible, wiping them out completely. You could then move on to the debt with the next-highest interest rate, and so on.

•   Another approach to reducing debt is to pay the minimum toward all your accounts, and then pay any extra you can toward the debt with the smallest balance. When that debt is paid off, you can move on to the next smallest balance, and so on.

•   If you can qualify for a lower interest rate, another option might be to take out a personal loan that consolidates all those high-interest debts into one more manageable payment.

Getting rid of that damaging debt can have long-range consequences as well.

If you can lower your credit utilization ratio, which shows the amount of available credit you have, you could build your credit. And that, in turn, could make it easier to qualify for lower-interest loans and credit cards in the future.

6. Balking at Bank Fees

Unless you’re vigilant about checking your statements, you might not even notice the fees your bank may be charging every month for your checking and savings accounts.

They might include service fees, maintenance fees, ATM fees (if you don’t use in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those little nips can take a toll over time and could even leave you with a negative bank balance.

If you see that your bank is hitting you with one or more monthly fees, you may want to consider shopping around for a less expensive bank, which might involve switching banks to an online-only financial institution. Because online financial institutions typically don’t have the same overhead costs banks with physical branches do, they generally offer low or no fees

7. Pressing Pause on Impulse Purchases

If impulse purchases are your downfall, consider trying a temporary spending freeze, during which you avoid buying anything that isn’t a must.

Or maybe pick a single category (shoes, wine, concerts) or a specific store to stay away from for a certain period of time.

To help keep you motivated, you might track the money you didn’t spend during your freeze and then put it to use paying down debt, starting an emergency fund, or saving for a down payment on a home or other short-term financial goal.

Once you start seeing the benefits of saying no to impulse purchases, you may find yourself spending less even after the freeze is over.

8. Making Lists

Another way you may be able to make your money stretch is to make a list any time you’re going to shop, keep it in your pocket or on your phone, and then stick with it in the store.

And lists aren’t just for grocery shopping. You could make one before you hit the pharmacy, the mall, the local coffee shop, the sporting goods store, or just about anywhere you might wander off course.

Keeping a list close at hand can help avoid having to go back to the store because you forgot something (keeping store visits to a minimum), and you might be less tempted by items that aren’t on your list.

9. Click ‘Unsubscribe’

If your favorite retailers tend to bombard you with emails alerting you to their latest and greatest sale, you may want to think about getting off their e-mailing lists.

Sales and great deals are happening all the time, and generally the best time to purchase something is when you really need it.

Even if you don’t find that needed item at its lowest ever sale price, you will likely end up spending less than buying more things simply because they are on sale.

If the bait to buy doesn’t constantly land in your inbox, you’ll be less likely to take it (and won’t even know what you are missing out on). This move could quickly translate into more cash or one less bill at the end of the month.

10. Maximizing the Money You Save

Another way to stretch your dollars is to consider how you might get a higher return on any money that is sitting in the bank earning little to no interest.

Higher-yield savings options you might consider include an online savings account, checking and savings account, certificate of deposit (CD), or a money market account.

For a longer-term payoff (and potentially higher rate of return), you may also want to consider putting more money into your 401(k) or other retirement fund, as well as starting or adding to a non-retirement brokerage account.

11. Keeping the Change

Loose change may seem fairly worthless, but over time it actually can add up, and might help you help you pay a bill or buy a nice dinner.

Instead of letting coins live indefinitely in the bottom of your bag or the cup holder in your car, consider setting up one money jar in your home to collect it all.

Then, every month or so, you might sort and roll the coins to take to the bank. (You can also use a coin-counting machine, available in some stores, but keep in mind that some deduct a fee, or percentage of your change.)

If you rarely use cash anymore, you may still be able to make good use of virtual change. Many mobile apps (perhaps the one your bank provides) and credit/debit card accounts offer users the opportunity to automatically round up purchases to the nearest dollar and have that money transferred into a savings account.

So, for example, if you bought a doughnut for $1.25, the purchase would be rounded up to $2, and the extra 75 cents would be sent to your account to go toward a savings goal.

12. Using Windfalls Wisely

It can be incredibly tempting to use a tax refund or a work bonus to buy something fabulous. And there’s nothing wrong with an occasional splurge.

But you may also want to consider using that money to pay down a high-interest credit card, make an extra payment on a loan, or start (or add to) a high-yield savings vehicle or other investment.

Any of these moves can help you stretch those dollars, either by cutting the amount of interest you’ll owe over time or adding to the interest you’ll earn.

The Takeaway

With a few smart savings strategies, you might be surprised at how much further you can stretch your money each month. Getting started is simply a matter of tracking your spending so you can then find ways to save.

Some money stretching moves might include negotiating with (or switching) service providers, putting a bit more money towards debt reduction, knocking down (or eliminating) monthly bank fees, reducing the temptation to make impulse purchases, and finding ways to make your savings grow faster.

Looking for a better way to manage your spending and saving so you can get the most for your money? Consider opening an online bank account. With SoFi Checking and Savings, you’ll spend and save in one place, which makes tracking your money easier. Plus, you’ll earn a competitive annual percentage yield (APY), pay no account fees, and have Roundups to help grow your cash.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .