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How to Build a Good Credit Score

Building a good credit score takes some time and effort. There are a few different factors that are considered when credit bureaus determine your credit score. Once you are in the routine of putting these good credit practices into use, your credit score will improve over time.

Make On-Time Payments

Making on-time payments for your credit card is the most important factor for your credit score. Missing just one credit card payment will not heavily impact your credit score. Frequently forgetting payments will. How much of an impact a late payment has on your credit score also depends on how late it is. A one off late payment that is just a few days late will do minor damage over time, but being 90 days late on a payment will have a huge effect.

Make on-time payments by setting up automatic payment, reminders on your phone to pay, and by reading your credit card statement regularly.

Utilize Your Credit Wisely

Your credit score also depends on your credit utilization rate, or how much of your line of credit you use each month. A rule of thumb is to keep your credit limit at or under 20%. While there is no formal rule that says using more than 20% of your credit limit will damage your credit score, the 20% rule is a good benchmark. You want to use your credit card to be able to buy essential items you need and earn rewards, but you do not want to max out your credit card.

Avoid using too much of your credit by checking on your credit card spending throughout the month.

Keep Your Old Credit Cards

To determine your credit score, the credit bureaus will look at your credit history. If you close an old credit card, you are shortening your credit history. Because there is not as much information about your credit history, the credit bureaus will consider you a riskier credit cardholder and this will lower your credit score. If you do decide to close a credit card, remember to claim any remaining rewards and make sure that your balance is $0 to avoid unnecessary interest from accruing.

Keep your old credit cards and store them in a safe place to avoid losing them.

Explore New Lines of Credit

There are other forms of credit including car loans, mortgages, and home equity loans. Taking any of these new lines of credit will influence your credit score. If you are responsible in making on-time payments here, then your credit score will be improved.

Explore new lines of credit when needed and make on-time payments.

Check Your Credit Report

Finally, checking your credit report will allow you to gauge how strong your credit score is. It is like having your grade checked from your professor. After reviewing your credit report, you will know whether you need to improve or maintain your credit score. You are granted one free credit report request every year from any one of the credit bureaus.

Check your credit report by requesting one from one of the major credit bureaus—Equifax, Experian, TransUnion, or Innovis.


Your credit score is important as it will determine if you can borrow money when seeking a loan or purchasing a car. Forming good credit habits is the first step to building a good credit score. After that, your credit score will improve over time.

In the next article, learn more about Why You Should Check Your Credit Report


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