A good credit score is important in today’s world. It can help lower your borrowing costs and help you to pay less for insurance. It could even help you land a job! That’s because lenders, insurance companies and a growing number of employers are using credit information to make decisions. What’s the best way to increase a credit score? Here are three things that people with high credit scores have in common:

  • They pay their bills on time. On-time payments can provide a big boost to a person’s credit score. Likewise, late payments can dramatically lower it. Your credit score reflects how well you make your payments on your mortgage, credit cards, student loans and other financial obligations. Your payment history is responsible for a third or more of your overall score. Consistent, on-time payments are vital.
  • They check their credit report regularly. Credit bureaus make mistakes. Checking your credit report at least once each year is key to making sure that the right information is being reported to the credit bureaus. Credit scores reflect the quality of your credit record, and mistakes can lower your credit score.
  • They use credit sparingly. Aim to use only a small percentage of your available credit. Maxed out credit cards or balances all approaching a credit limit will certainly lower your credit score. Have you heard the term credit utilization? That’s the percentage of your available credit that you actually use. Lenders and credit-scoring systems reward those with low credit utilization rates. Generally, a good credit utilization rate is less than 30 percent. Simply put, that means you’re using less than 30 percent of the total credit that is available to you. On a credit card with a $10,000 limit, that means keeping your balance below $3,000.

Consumers with high credit scores often enjoy lower rates for mortgages and other types of consumer loans and lower premiums on some types of insurance policies. A high credit score also can help you during a job search, since nearly half of U.S. employers conduct credit background checks on applicants.