How to Build Credit

May 17, 2019 by  
Filed under Credit Report, Credit score

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a man holding his credit card and browsing through an online shop using a laptop

Credit is an important thing to have. It is important for those of us that would like to borrow money from banks to buy a house, a car, get a credit card or business loan. Having credit can help individuals. It shows that they are prepared to pay back the money being borrowed, and they are a trustworthy client to have. It is important that those out there learn how to build credit so that there’s little to no struggling during the process.

It is also important to note that even those that have built their credit up previously may have fallen on hard times and might require the help of learning how to build credit again. Credit can be something hard to build up; it can take time. Keep this in mind when considering not paying a bill or skipping out on credit card debt. That debt can stay with an individual for some time, making it hard to catch up. It is important to come up with a plan, work towards paying off the debt and know how to build credit so you can make use of the tips and tricks that will help keep you afloat.

Credit 101: The Basics

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Knowing the basics regarding the credit you are trying to build is always good. Knowing what to expect and having a timeline definitely helps. Here are specific things to keep in mind regarding your credit and knowing how to build credit so you can get the most out of your score:

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    Debt can happen to anyone, even you.
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    Creditors will share your name with others so they’ll know you defaulted. 
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    Building your credit, even if you know how to build credit, doesn’t happen overnight.
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    Having good credit is actually very important.
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    There is such a thing as having too much credit and too many credit cards!
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    You can ask creditors for a better interest rate if you have a high credit score and great credit history.
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    Closing out cards can actually hurt your credit, so hold on to them, even if you don’t use them.
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    You’re welcome to request a copy of your credit score from all three bureaus for free once every year to check for changes

Tips for Maintaining a High Credit Score

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It is important that even though you have built up that credit score that you take steps to maintain it. Maintenance is key to keeping a great credit score. Here are some of the best tips for maintaining your credit score so it climbs to—and stays at—the perfect level of 850. It is also important that you know what goes into having a great credit score. It does not matter so much about the amount of credit you have but more about the length of the credit lines, the debt on these lines, the on-time payments and more.

  • On-time payments: always pay your bills on time, every time, especially credit-related bills. Ex: credit card, car payments, mortgages, private loans, etc.
  • Low credit balances: keep the balances on your credit cards lower than 30% of your total credit limit. Exceeding this amount might harm your credit rather than help it.
  • Steady, old accounts: don’t close out old accounts. Even if they are not being used, having these accounts on your report can help because it shows you have a long-standing reputation.
  • Credit report vigilance:  always watch your credit report to make sure there are no new charges that are happening without your knowledge. 
  • No online overindulgence: limit how much you apply to stuff online because any new credit can hurt your score.

How to Build Credit

Following these steps can help you build better credit overall. With these steps in mind, you can even spread the word to others on how to build credit. There are two main credit bureaus you want to know and keep an eye on, FICO and VantageScore. Creditors work with one or the other to read into your credit and see where you stand. By having a few different things, you can build better credit in the eyes of both bureaus.

Get a Secured Credit Card

While this seems easier said than done for a lot of people, there are many first-time user cards out there that allow the newbie to take advantage of a small line of credit. Some cards are secured, and the user can put money on them to use them like a charge card that also reports to the major credit bureaus.

Become An Authorized User

Having someone else put you as an authorized user on their card gives you the same spending power that they have. This also means that it can help your credit if the card is used wisely. Just make sure that the person the card is connected to is smart about their spending, buying and paying for expenses so the card is paid for on time. If it is not, it can actually hurt your credit.

Apply For A Loan To Build Credit

There are things known as credit-builder loans. These are small unsecured loans that allow people to build their credit without having to worry about qualifying for credit cards. These loans were specifically designed for people that want to build their credit back up or lacked credit in the first place. They can be obtained through credit unions. Signing up for the union can allow you to get the perks that come from these loans.

Get Someone To Co-Sign

Getting someone to co-sign for you can get you in the credit game with ease. Not only do you get the benefits of having the loan you signed up for, but you can put it in your name as something to show. You just need someone that is willing to sign on your behalf and put up the cash if you happen to default on the loan. However, it is important that you don’t. If you do default on the loan, this means bad things for your credit.

Build By Building Good Credit Habits

Having good credit habits is going to help you in the long run when you need to make sure that your credit is as high as possible. Of course, being able to spend the right amount on the cards is the first thing to think about. A lot of times when people are handed a high amount on a credit card or cards, they have the instinct to go out and spend almost all of it. This can actually get you in trouble. Try to refrain from spending too much on the cards as this can mean a lot of credit card debt in the long run.

Always make sure to make your payments on time, every time. Not just some of them, but all of them. Even one missed payment can cause your credit score to drop lower than you would like. This is not a good thing if you’re trying to build it. While some things might not be reported right away, it is important that you pay your bills on time or early to reduce the chances of being negatively affected by it.

Avoid opening up too many credit accounts. This can lower your account age and cause the credit score that you have to drop down. In order to keep the score up, it is important that you keep the older accounts for as long as possible and do not add a bunch of new ones all the time.

Even if you are not using a credit account, you want to make sure that you keep it open. Closing these accounts can cause your credit score to drop lower than you may like. The cards will not harm your score by sitting there not being used. It is important that a small charge is put on them from time to time to keep them active. For example, paying with your card for gas and then going home and scheduling a payment to pay it off is ideal.

It is good to keep checking your credit score every 14-25 days because it will constantly change as you work on it. This will give you an idea of whether you’re going in the right direction or not. Some individuals even request a professional that can provide a list of things to do to fix or bring up your credit as fast as possible. It is also good to keep in mind that credit scores take time to work on and to improve.


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With a high enough credit score, you’re easily able to take advantage of various perks. Everyone has to build their way up from the bottom and then hold yourself there when trying to get a credit score that is acceptable. Following these guidelines can help those interested in having better credit overall. Knowing how to build credit is information you can use now and spread to all those that might struggle while building theirs. Regardless of where you are or they are in this process, having information to help you along the way is always helpful.

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