Your credit profile, or credit report, is the basis for your credit score. Your credit profile is a record of your credit history, including how much credit card debt you have, whether you pay your bills on time and how many credit accounts you’ve opened. 

Your credit profile could affect more than just your finances — potential lenders, landlords and even employers could review your report to determine how responsible a person you are. For example, if you apply for a personal loan, the lender will review your credit profile to help them decide whether to approve you and if so, what terms, such as the interest rate, they’re willing to offer. 

Building a healthy credit profile may take time, but there are steps you could take to improve it. Keep reading for some key financial habits that could make a difference. 

Review your credit profile regularly 

The first step is to regularly review your credit profile so you become more familiar with how your financial decisions impact your credit score and where you might need to make changes. For example, if you miss a payment on a credit card, it could show up on your credit report and lower your credit score. Seeing how one decision could impact your credit profile might motivate you to not miss another payment.  

You can check your report for free once every week through the three main credit reporting agencies (Equifax, Experian and TransUnion) at annualcreditreport.com, though you might decide it’s not necessary to check that often. That said, regularly checking your credit report could also tell you if there has been any fraudulent activity, such as identity theft, or incorrect charges that could lower your credit score. 

Prioritize your payment history  

The most important action you could take for a healthy credit profile is to pay your bills on time and always make at least the minimum monthly payments. Your payment history is the most important factor contributing to your credit score (35%). Your payment history captures late and missed payments, as well as whether an account has gone to collections. Negative payment information could remain on your credit profile for up to seven years.

If you struggle to keep up with payment due dates, consider setting up automatic payments. Just make sure you can cover the full amount that will be debited or charged so you don’t overdraw your bank account or have your credit card declined.

If you have any overdue accounts, meaning you haven’t made your payments by the due date, make it a priority to catch up as soon as you can. You could always try calling your lender to see if they offer a payment plan or other options to help you catch up. 

Be careful with debt

Having excessive credit card debt could impact your credit utilization ratio, or the percentage of your available credit that you’re currently using. Your credit utilization ratio makes up 30% of your credit score, and is another way lenders can see how well you manage money. You want to try to keep your credit utilization below 30% whenever possible for a healthy credit profile.  

Aim to keep your credit card balances low and pay the balance in full every month if you can.  

Keep older accounts open

Another important factor of a healthy credit profile is the length of your credit history, which accounts for 15% of your credit score. Accounts that have been open for a long time and remain in good standing show lenders you’re responsible and can be trusted with new or higher credit amounts at potentially lower interest rates. 

Closing older accounts could also affect your credit utilization ratio, since you’ll have less available credit. If you find you don’t use a credit card very often, you could make a few small charges every month just to keep it active. 

Don’t rely on new credit cards 

You also want to steer clear of opening new credit accounts too often. Too many new accounts on your credit profile could communicate to lenders that you may be struggling to manage your debt. 

When you apply for a new card, it triggers a type of credit inquiry called a “hard check.” Typically, a hard check could slightly lower your credit score. If you’re shopping around for a new credit card, you could look into prequalifying for one before applying. Prequalifying triggers a different type of credit inquiry called a “soft check” that won’t impact your credit score. You’re not guaranteed to be approved when prequalifying, but it’s a helpful way to see what you might be eligible for without harming your credit score.

A healthy credit profile is in reach 

You can build a healthy credit profile by being thoughtful about your finances. Check your credit report regularly, pay your bills on time, be strategic about the debt you take on and carefully consider how old and new credit accounts will affect your long-term financial health.  

Be proactive about making good decisions for your credit to put yourself in the best possible position now and in the future. 

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