A good credit score can save you thousands of dollars over your lifetime by qualifying you for lower interest rates. Understanding how it's calculated is the first step to improving it.

How Your Credit Score is Calculated

Your score is based on five main factors: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Paying your bills on time is the single most important factor.

How to Improve Your Credit Score

Pay all your bills on time, every time. Keep your credit card balances low (below 30% of your limit is a good rule of thumb). Don't close old credit cards, as this can shorten your credit history.