3 ways to boost your credit score (and 3 ways to damage it)

When it comes to taking the next step in your life, one of the most important numbers could be your credit score. After all, it can stand in the way of some of the biggest purchases you may want to make, like a car or a house.

First the basics, five factors comprise your credit score, according to CreditRepair.com. (See graph below)

Not all debt is the same and some  is considered ‘good’ according to Scott Smith, president of CreditRepair.com. “Any kinds of car loan, home loan…those things actually provide you great credit history when you pay them off on time and fill those debt obligations,” he said.

Even credit card debt isn’t “necessarily wrong” said the credit expert. But Smith warned “you don’t want to have more than 30% utilization on that (account) and you do want to pay it down as often as possible.”

Scott Smith gave his assessment on the three Do’s and Don’ts of improving your credit score.

Aside from staying on top of your credit reports and paying bills on time, Smith advised to lower debt-to-credit ratio. The ideal percentage distribution he suggested is “anything under 25% or 30% [which] usually keeps your credit score at an optimal level.”

Smith warned, “over 50% utilization on your credit report, you normally see your credit score dive pretty quickly.”

Obviously, spending money you don’t have is never a good fiscal idea. But Smith also cautioned not to cancel credit cards, you no longer want or use. “Many of those credit cards provide you great credit history with long-term positive impacts to your credit score,” he said.

Instead, Smith suggested to just cut up the credit cards and to “pay them down as quickly as possible, and leave them with a zero balance, that gives you a lot of available credit on your limits.”

Get the Latest Market Data and News with the Yahoo Finance App

More from Yahoo Finance

August playbook to ride out the market's wild roller coaster ride

Future African-American billionaire on 'Black Lives Matter' movement

Home buyers, don't over-think the timing of a Fed rate hike