Studies today show that more than 24% of millennials have no idea what a credit score is. Besides signifying your trustworthiness to financial institutions it is how loan rates and other decisions are made. Below are the top 6 reasons why today many Americans are failing to raise their credit scores.

1. Not everyone is aware of what a credit score is or that it even exists.

Believe it or not many people out there today 25% being millennials actually don’t know that they have a virtual number above their head following them everywhere they go. They are clueless about why they aren’t getting approved for things such as loans and credit cards or when they are approved for something why the terms are so different than others.

2. Those that are aware of what a credit score is seem to have the wrong definition of how to maintain one in good standing.

Believe it or not many think the more credit cards you have the higher the score will be. In fact the more credit cards you open you create higher debt which makes lending agencies see you at a higher risk. Keeping the balances low will, however, lessen the risk to potential lenders. Paying off your bill several times a year and using 30% of the limit is a good way to keep your credit score in the decent zone. It doesn’t mean to stop using them it just means to be aware of your credit utilization ratio.

3. Hard credit inquiries from agencies is a huge factor on your credit score.

Examples of a hard inquiry are home mortgage loans, vehicle loans, credit cards and large lines of credit. Trying to minimize these inquiries will lessen the impact on your credit score. Background checks are an example of a soft inquiry and have no negative effect on your credit score in any way.

4. Paying your bills on time.

Yes, paying your bills on time is the simplest way and easiest way to maintain a healthy credit score. Not sure why but many people don’t believe paying an account late has an impact as long as its paid along with the late fees. Wrong!

5. Fixing credit report errors.

Now that we have unlimited and easy access to our credit reports its a good idea to closely monitor them for any unusual activity or errors. Making this a routine will ensure your accounts are always correct and up to date. If by chance you find an error on your report you can dispute that error with all three credit bureaus. Correcting errors will save you time and money in the long run.

6. Managing your credit.

If you’ve been trying to establish credit for a short time make sure not to open too many accounts at once. Remember too much credit isn’t necessarily a good thing. Only apply for accounts as needed and make sure what your applying for has the best rates as well. Shop around and compare. If you don’t really need that latest retail credit card do your credit score a favor and don’t apply. When closing an account keep in mind it won’t immediately disappear from your credit report. Also, your score may not be affected immediately as well. If the account you once had open is sent to collections until that is resolved it will have an impact on your score.