How to Build and Maintain a Strong Credit Score
Your credit score is a three-digit number that can save—or cost—you thousands of dollars over your lifetime. Whether you're building credit for the first time or working to improve your score, these strategies will help.
What Affects Your Credit Score
Understanding the factors helps you focus your efforts:
- Payment history (35%): The single biggest factor. Pay every bill on time, every time.
- Credit utilization (30%): How much of your available credit you're using. Keep it below 30%—ideally under 10%.
- Length of credit history (15%): Older accounts help. Don't close your oldest credit card.
- Credit mix (10%): Having different types of credit (cards, loans, mortgage) can help.
- New credit inquiries (10%): Too many applications in a short period can lower your score.
Building Credit From Scratch
If you're new to credit, consider these starting points:
- Secured credit card: You deposit money as collateral, and the card issuer gives you a matching credit limit. Use it for small purchases and pay in full each month.
- Credit-builder loan: Available at many credit unions, these small loans are designed specifically to help you establish payment history.
- Authorized user: Ask a family member with good credit to add you as an authorized user on their card.
Improving an Existing Score
Focus on the high-impact areas: catch up on any late payments, pay down credit card balances, and avoid applying for new credit unless necessary. Even a 50-point improvement can save you significantly on loan interest rates.
Protecting Your Score
Set up autopay for at least the minimum payment on every account. Monitor your credit regularly for unauthorized activity. If you're rate-shopping for a mortgage or auto loan, do it within a 14-day window so multiple inquiries count as one.
Building great credit is a marathon, not a sprint. Stay consistent, and your score will reflect your good habits over time.
