📈 Want to improve your credit score? Whether you’re starting from scratch or rebuilding, having good credit is essential for getting loans, credit cards, and even renting an apartment.
In this guide, we’ll cover 7 simple steps to building credit, improving your financial health, and setting yourself up for future success.
Step 1: Open a Credit Account
💳 If you don’t have any credit history, start by opening an account that reports to all three major credit bureaus:
Best Options for Beginners:
✔ Secured Credit Card – Requires a deposit and works like a regular card.
✔ Credit-Builder Loan – A loan designed to help establish credit history.
✔ Authorized User – Get added to a trusted person’s credit card.
📌 Tip: Make sure your activity is reported to all credit bureaus for maximum impact.
Step 2: Pay Bills on Time (Every Time!)
⏳ Payment history makes up 35% of your credit score—making this the most important factor for building credit.
✅ Set up auto-pay or reminders to never miss a due date.
✅ Even a single missed payment can stay on your report for up to 7 years!
📌 Tip: If you accidentally miss a payment, call your lender and ask for a goodwill adjustment to remove the late mark.
Step 3: Keep Your Credit Utilization Low
📊 Credit utilization = how much of your available credit you use. Keeping this low is key!
Best Practices for Credit Utilization:
✔ Use less than 30% of your total credit limit.
✔ For an excellent score, keep it under 10%.
✔ Pay balances before the statement date to reduce reported usage.
💡 Example: If your limit is $1,000, try to keep your balance below $300 at all times.
Step 4: Avoid Too Many Hard Inquiries
📌 Every time you apply for a new credit card or loan, a hard inquiry appears on your credit report, which can lower your score.
✔ Only apply for credit when necessary.
✔ Too many new accounts too quickly can make lenders see you as a risk.
📌 Tip: If you’re shopping for a mortgage or auto loan, multiple inquiries within 14-45 days count as one inquiry—so do it in a short timeframe!
Step 5: Keep Old Accounts Open
🏦 The longer your credit history, the better! Closing old credit accounts can lower your score by shortening your credit history.
Best Practices:
✔ Keep older credit cards open (even if you don’t use them often).
✔ If you must close an account, close the newest ones first.
📌 Tip: If a card issuer wants to close your card due to inactivity, make a small purchase every few months to keep it active.
Step 6: Check Your Credit Report for Errors
🚨 1 in 4 people have credit report errors that can lower their score.
🔍 Get free weekly credit reports from AnnualCreditReport.com.
What to Look For:
✔ Incorrect balances or payments
✔ Accounts you don’t recognize (possible fraud!)
✔ Credit limits not updated correctly
📌 Tip: If you find an error, file a dispute with the credit bureau to have it corrected.
Step 7: Use a Mix of Credit Accounts
📊 Lenders like to see that you can handle different types of credit.
✔ Revolving Credit (Credit Cards, Store Cards)
✔ Installment Loans (Car Loans, Student Loans, Personal Loans)
✔ Mortgages (Home Loans)
📌 Tip: You don’t need every type of credit, but having a mix can boost your score over time.
Final Thoughts: Stay Consistent and Be Patient
🚀 Building credit takes time—but if you follow these 7 steps, your score will steadily improve.
✅ Key Takeaways:
✔ Pay on time, every time
✔ Keep balances low
✔ Avoid too many new accounts
✔ Monitor your credit report for mistakes
✔ Use a mix of credit responsibly
📌 Start today, and your future self will thank you!