How to Build a Good Credit Score – 8 Tips

Developing a good credit score can be very important to saving you money and setting yourself up for success.

Establishing credit and making that credit score stronger is relatively simply and mostly takes a consistent focus on developing good habits.

The range for credit scores varies from 300 to 850, with the higher number being a stronger credit score.

A good score usually starts in the low 700s but there are important details about your credit score to become familiar with that can affect your score.

Use the following 8 tips:

Know What Makes a Credit Score Good

Get Credit for the Bills You Pay

Avoid Applying for Multiple Credit Account Close Together

Stay Up To Date With Payments

Keep Credit Card Balance as Low as Possible

Maintain Current Debt

Use Credit Karma

Check Your Credit Reports and Scores

These tips should give you a better chance to raise your credit score and increase the strength of your credit.

Through this post I hope to provide useful information about how to build a good credit score and the reasons why this is important.

Know What Makes a Credit Score Good

Doing some research and learning what goes into calculating a credit score is important.

There are 5 factors that determine what a person’s credit score will be including:

  • Payment History = 35%
  • Credit History Age = 15%
  • Number of Credit Inquires = 10%
  • Types of Credit on Your Report = 10%
  • Specific Level of Debt = 30%

Each of these factors make up a percentage of what your score will come out to be. If you understand what each of these factors add to your score, then you can concentrate on the bigger areas.

Focus on paying off your bills on time and keep your debt as low as possible. This will be huge for keeping your score good because these factors make up 65% of your total score.

But if you neglect the other 3 factors this will still lead to a significantly lowered score.

Finding the best way to focus on each of these factors will give you a stronger chance of creating a good credit score.

Get Credit for the Bills You Pay

Getting credit for bills that you are already paying just makes sense and is possible through certain services. Use Rental Kharma to get credit for paying rent or another bill which can be crucial for establishing credit.

Rental Kharma has certain fees attached to getting started but if you are interested in building credit then this could still be very worth it.

The start up fee is $25 while the monthly service fee is $6.95.

There is even a feature where you can pay a $60 fee to have payments in the last 2 years be sent to TransUnion. This could be huge for establishing payment history for something that you have already been paying.

Some credit scores will not take these payments into account but some will and that makes this worth it.

If you can have these payment affect one credit score positively, then it could help you apply for a loan or even apply for another credit card.

Avoid Applying for Multiple Credit Accounts Close Together

Applying for multiple credit accounts close together could seriously hurt your credit score. Applying for a credit account will normally cause a small drop to occur but will rebound after some time.

Try to space out how often you apply for credit accounts by at least 6 months to avoid a significant drop in your score.

Credit Card in Pocket
Avoid Opening New Credit Account Unless Absolutely Needed

Also, avoid closing a credit account unless it is absolutely necessary.

Closing an account will hurt your credit utilization and reduce the age of your account age so consider trying to keep your account open even if it is not being used very much anymore.

Stay Up To Date With Payments

Staying up to date with payments will allow you to continue increasing your credit score and strengthen key parts of your credit.

This goes for all your expenses because some late paid expenses can end up being reported to your credit score.

I always use online banking to remind me when I am supposed to make each payment for that month. I even mark my calendar to show when I am supposed to have paid my monthly credit card payment.

Actually paying your monthly credit card payment a couple of days before it is due could actually help make sure that your payment is submitted on time.

Once you submit a payment online, there can often be a couple days where it will say that this payment is pending. If you submit the payment a couple days earlier it will lessen the chance of a late payment occurring.

If you want more tips on how to manage money, read How To Budget Your Money Better.

Stack of Credit Cards
Keep Credit Card Balance as Low as Possible

Keep Credit Card Balance as Low as Possible

Keeping the credit card balance as low as possible is going to give you the best chance at raising your credit score.

Ideally you want to keep your credit card at a zero balance but keeping the balance on your credit card smaller will help improve your score.

You want to make sure that your credit card balance does not go beyond 30% of your credit card limit.

If your credit limit is $1,500 and you have $450 or less on your account, then you will have a better chance of paying it off and keeping your credit score higher.

30% of Credit Limit = The Most You Should Put on that Credit Card

If you get in the habit of going beyond 30% of your credit limit on your credit card, then you increase the risk that you will not be able to pay off that balance before the payment is due.

Also, if you make a big purchase that uses a lot of your credit, such as spending $800 when your credit limit is $1,500, this could hurt your credit score. Even if you pay off this expensive purchase right away it could still negatively affect your credit score.

Maintain Current Debt

Maintaining the current debt is essential so as not to add deadly additional debt to the existing ones. Unpaid loans you have taken out or other credit lines you have taken out, will result in you having a lower credit score.

Taking the time to come up with a debt payment plan to reduce debt significantly will give you a better chance of getting a higher score.

Jogging and Working Hard
Work Hard to Maintain Debt

It will probably take some hard work but if you consistently work hard to maintain your debt, then you are going to be more likely to build stronger credit.

Having too much debt can lower your credit score and affect your credit, so keeping the debt lower will help you maintain a stronger score.

If you want to read more about reducing debt, then read Reducing Debt Tips.

Use Credit Karma

Use Credit Karma to get tons of helpful information about your credit score whether you are just starting to build credit or have been established for years. This resource is super valuable for staying on top of where your credit score is and what direction it is going.

I like to check my credit score on Credit Karma at least once every two weeks to get an idea of where it is and if there has been any significant changes to my credit.

I have been able to watch as my score has gone up and I have continued to focus on paying off my credit card payments on time.

Credit Karma has a credit cards menu on their home page that goes into great detail for each card. Whether you are looking for Travel Cards, Rewards Cards or Best Business Cards, this resource will give you important details about these cards.

Credit Karma can give you extra tips about how to save more, reduce debt and basic credit information.

You can use Credit Karma Tax to file for taxes for free with no hidden fees. They will give you tips and tricks as you are filling out their form to help if you encounter any problems or have any questions.

Credit Karma has specific articles that are designed to help reduce debt and get started on lowering the debt. They have a Debt Repayment Calculator and Simple Loan Calculator, which are both valuable tools for reducing debt or reducing loan payments.

Credit Karma is a resource that is very helpful for wherever you are on your financial journey.

If you want to learn more about this resource, check out my Review of Credit Karma – Potential Resource.

Check Your Credit Reports and Scores

Checking your credit reports and scores consistently will help you keep the score up to date and avoid any errors popping up on your report.

Sometimes there can be an error that pops up on your report and checking consistently will help you speed up the process for fixing these errors.

It is important to check your scores and reports through a service that does this for free and is not doing a hard check.

Credit Karma is what I use and it has been really great for keeping me up to date with where my scores are and any progress that I have made.

Bonus Tips for Success

Determine if this is the best time for you to start building credit in your life. Whether you are building your credit from scratch or trying to make it stronger, there can often be a few things to think about.

1. Make sure that you are in a financially stable job where you get consistent money so that you can have the money to pay off the credit card payment each month.

2. Do you really understand how your credit card and credit score relate?

3. Do you feel very stressed and pushed in your life? If so, then you realistically might not have the time and energy to build up your credit score.

If you feel prepared for taking this step to build stronger credit, then follow the tips here in this post and you should have a better chance at building a stronger credit score.

Consistency Matters

Focus on consistently paying off your credit card payments as well as practicing the other money managing tips in this post and you will likely increase your credit score.

Definitely use Credit Karma no matter where you are on your financial journey because it will likely give you useful information.

If you liked this post and want to learn how to save more money on taxes, then read How to Save Money on Your Taxes.

I hope that you liked this post and learned some helpful information on how to build a good credit score and why it is so important.

If you have any questions, please leave them below and I will answer them as best as I can.

8 Replies to “How to Build a Good Credit Score – 8 Tips”

  1. Interesting post. What you are raising here in your post is very enlightening interms of keeping your credit score in check. As we don’t always have cash readily available especially to fund things like housing, business and the like, it helps to keep your credit score in check if you are to qualify for further financing. This will relieve you of unnecessary stresses as well. Thanks for sharing the info.

  2. Great advice on how to build a good credit score. My credit score is lower than what I need it to be, and I will put some of your steps into action to see if it can improve it. Credit Karma sounds like a good program, so I will look into joining it. Having good credit in this business environment today is a must have. Thank you for providing a roadmap to credit score building success. Tom

  3. Hi, Jesse,

    Interesting article. Having a good credit score is critical in the U.S. I always pay my cards on time and never carry a balance to the following month. I also try to not surpass the 30% you mention. By the way, does this 30% apply to a single card or all the cards you have in total? I’ve always wondered about that.
    I remember I tried to use Credit Karma once but some reason I wasn’t able to do it. Anyway, I monitor my credit score through the in-built tools my credit cards provide. So far this has worked for me. Although every now and then my score drops dramatically and I don’t understand why.
    Thanks for sharing.

    1. You are welcome!
      The 30% should apply to each card.
      I had trouble getting started with Credit Karma at first too because my address could not be confirmed. It took a little time to work it out but eventually I was able to get connected with Credit Karma and it has been very helpful.
      Sounds like you have a good system for maintaining good credit.
      The drop in your credit score could be due to making an expensive purchase, even if you paid it off completely.
      An expensive purchase that uses a lot of your credit, can still lower your credit score even if you pay it off right away.
      I am happy that you liked this post!

  4. Thank you so much, Jesse, for sharing this informative article on How To Build a Good Credit Score.

    I have learned a great deal and will use the info in the future to help with my decision making when deciding to take up a credit card.

    We need this sort of education to help us stay away from debt. Whilst reading this article, I also visited your article on Reducing Debt Tips.

    The tips are spot on. I particularly like #1 and #4. I think these are kind of things we can take full control and ownership ourselves.

    It will help in speeding up the process of clearing the debt a bit quicker.

    I have a question to ask: Is Credit Karma available only in the US or worldwide? I live in the UK and just wonder whether something like this exists.

    Keep up the good work.

    Best wishes

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