By Sabrina Karl

Anytime you apply for a loan, a new credit card, or even an insurance policy, having a higher credit score will save you money by earning you a lower interest rate, better perks, or a cheaper premium.

So how can you boost your score? The No. 1 step is to understand the factors your score measures, because if you don’t know the rules of the game, you can’t play to win.

Six main factors are incorporated into your credit score and three are the most important. The first is your track record of payments. Whether or not you paid all of your minimum monthly payments on time is recorded each month, and a rating is then assigned for your on-time record.

Also highly important is how much of your available credit you’re using. Maxing out all of your credit cards means your credit utilization rate will be high, leading to a lower score, while using less than your available credit will raise your score.

Rounding out the top three critical factors is the presence of any derogatory marks, such as accounts sent to collections, a bankruptcy, property liens, or a foreclosure. These black marks have a significant negative impact and remain on your report for many years.

After the Top 3, the factor carrying the most weight is the age of your credit history. The longer your history, the higher your score. This is why young adults take some time to build up their score, and why it’s smart to keep your oldest credit card open.

Lastly, having numerous different account types on your record (e.g., credit cards vs. a car loan) can help your score, while applying for credit multiple times in the past year can reduce your score, though these factors have less impact than the others.