Home > Credit 101 > 3 Smart Habits That Can Help Build Your Credit

Comments 0 Comments

When it comes to credit scores, a true quick fix is all too rare. While that might be disconcerting to hear, it doesn’t mean all hope is lost. Improving your score basically boils down to two things: following good credit practices and time. While you don’t have any control over time, you can control the credit practices you choose to employ. Incorporating these three smart credit habits into your life can help build your credit.

1. Pay Your Bills On Time

Your payment history is the most important factor in your credit score – which means it’s hugely important to pay on time. Even if you can’t pay the balance on your credit cards in full every month, for example, being punctual with at least the minimum due shows that you’re making an effort to pay back your debt. (This calculator can help you figure out how long it’ll take to pay off that credit card.) Late payments can do serious damage to your credit score, so if you find yourself struggling to remember due dates, try setting up automatic payments online. Most credit card companies offer a variety of payment options to help fit your particular needs.

2. Keep a Low Balance on Your Credit Cards

Another major factor of your credit score is your debt amount — including your credit utilization, which is a metric that determines how much of your available credit you’re using. This is determined by dividing your total credit card balances by your total open credit card limits. Creditors use this as a benchmark to determine lender risk; someone who consistently maxes out their credit cards or uses too much of their available credit will typically have greater difficulty paying it back. Optimally, try to never use more than 30% of your available credit at any one time and avoid maxing out your cards altogether.

3. Know What’s on Your Credit Report

There’s always a chance that a poor score could be the result of an error on your credit report. Your report shows what lines of credit are currently out under your name, how many credit inquiries you’ve had, and information regarding your public record and collections. Checking your report every several months can help you catch those mistakes so you can take steps to correct them and protect your credit. You can get your credit reports for free every year from each of the three major credit reporting agencies through AnnualCreditReport.com. You can get a free credit report summary every month on Credit.com to watch for important changes.

Remember, building credit is going to take a lot of time and diligence. While it might be a bit of a struggle though, the impact it will have on your financial life is huge. Try to keep the end result in mind when curbing your poor credit habits and the process should be a whole lot easier to handle.

More on Credit Reports & Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team