Ever wonder what your credit score is actually made of? It's five things — and the good news is that two of them matter more than the other three combined. So you don't have to do everything. You have to do the right things.
Here are the five, in plain English. One: payment history — do you pay on time? This is the biggest piece. Two: utilization — how much of your credit limits are you using right now? Second biggest. Together, these two are most of your whole score. Three: how long you've had credit. Four: new credit — how recently and how often you've applied. Five: your mix — whether you have different types of accounts, like a card and a loan.
Notice what that means: the two things you have the most control over right now — paying on time and keeping balances low — are also the two that matter most. That's good news. Your energy goes to the two highest-impact habits, and we cover exactly how to do both in the next lessons.
Two myths to clear out of the way. You do not have to carry a balance to build credit — that's false, and it just costs you interest. And you do not need a fancy mix of loans right now; mix is the smallest factor, and we let it build naturally over time.
If you forget everything else, remember two sticky notes: pay on time and keep balances low. Everything else in this course supports those two.