Your credit score affects everything from loan interest rates to apartment applications. Whether you're building credit from scratch or recovering from past mistakes, these strategies will help you improve your score systematically.
Understanding Your Credit Score
FICO scores range from 300 to 850 and are calculated from five factors:
- Payment history (35%): Whether you pay on time—the most important factor
- Credit utilization (30%): How much of your available credit you're using
- Length of credit history (15%): How long you've had credit accounts
- Credit mix (10%): Variety of credit types (cards, loans, mortgage)
- New credit (10%): Recent credit applications and new accounts
Strategies to Build Credit
1. Always Pay On Time
Payment history is the single biggest factor. Set up autopay for at least the minimum payment on every account. Even one 30-day late payment can drop your score by 100+ points and stay on your report for 7 years.
2. Keep Credit Utilization Low
Credit utilization is your balance divided by your credit limit. Aim to keep it below 30%, ideally below 10%. If you have a $1,000 limit, try to keep your balance under $100. Pay down balances before the statement closes for the biggest impact.
Utilization updates when your statement closes, not when you make purchases. Paying down your card a few days before the statement date can boost your score within a month.
3. Don't Close Old Cards
Closing old credit cards hurts your score in two ways: it reduces your total available credit (increasing utilization) and shortens your average account age. Keep old cards open, even if unused. Put a small recurring charge on them to prevent closure for inactivity.
4. Become an Authorized User
If a family member has excellent credit, ask to be added as an authorized user on their oldest card with good payment history. You don't need to use the card—their positive history gets added to your credit report.
5. Get a Secured Credit Card
If you're building credit from scratch or recovering from bad credit, secured cards are the easiest approval. You put down a deposit (usually $200-500) that becomes your credit limit. Use it responsibly for 6-12 months, then upgrade to an unsecured card.
6. Dispute Errors on Your Report
Check your credit reports at AnnualCreditReport.com for free. About 1 in 5 reports contain errors. Dispute any inaccuracies directly with the credit bureaus (Experian, Equifax, TransUnion). Correcting errors can provide an immediate score boost.
7. Avoid Too Many Applications
Each hard inquiry (credit application) temporarily drops your score 5-10 points. Space out applications and only apply for credit you need. When rate shopping for mortgages or auto loans, multiple inquiries within a 14-45 day window count as one.
Building Credit From Scratch
If you have no credit history, start with these steps:
- Get a secured credit card and use it for small purchases
- Pay the full balance every month
- Ask a parent to add you as an authorized user
- Consider a credit-builder loan from a credit union
- After 6 months, apply for a student or starter card
Key Takeaways
- Payment history matters most—never miss a payment, set up autopay
- Keep credit utilization under 30%, ideally under 10%
- Don't close old credit cards, even if unused
- Check your credit reports for errors and dispute inaccuracies
- Building credit takes time—expect 6-12 months to see significant improvement