Tips for Building Your Credit

Your credit score can affect many aspects of your life—from getting a loan to getting a job or getting a house. Good credit is necessary for sound finances and many major purchases. But there are no quick fixes or shortcuts to building good credit. You must start by establishing credit, then embrace responsible credit habits over time. This helps you create a record that shows lenders you’re a low risk and a desirable customer.

The following tips for building your credit help you understand and improve on the key factors that the three major credit bureaus use to calculate your credit score. By following these smart financial guidelines, you can demonstrate your credit worthiness. That makes you a more desirable customer and borrower for many businesses and lenders.

1. Review Your Credit Report

In order to build your credit, you have to understand it. Start by regularly reviewing your credit reports. You can request your free annual credit report from each of the three credit bureaus and assess your credit as it stands right now. Review the following:

  1. Payment history
  2. Amount of credit you’re using
  3. Credit age
  4. Mix of credit account types
  5. Credit inquiries

Our free Credit Report Card can help you understand what is in your credit report and how those things affect your credit score. Our report card will help you identify areas that need improvement and help you make a plan to address these issues.

2. Dispute Errors and Inaccuracies

As you review your reports, keep an eye out for any errors. Credit report errors are not uncommon. In fact, a Fair Credit Reporting study found that one in four consumers found mistakes on their reports that can hurt their scores. You have the right to dispute those errors and fix your credit report. You can do credit repair on your own or hire a credit repair company to help you.

3. Keep Credit Accounts Open and In Good Standing

If you already have available credit, keep the accounts open. Older credit accounts help assign a credit age, which makes up 15% of your score. Closing an old account makes it look like you didn’t start establishing credit until later, which can lower your credit score.

    Get everything you need to master your credit today.
    Get started for free

    And if you close a credit card, you also lose valuable available credit for your utilization rate. It may be better to keep the card open to support a lower debt-to-credit ratio—just don’t run up the balance. Make small purchases two to three times per year and pay them off during the following billing cycle.

    4. Make On-Time Payments

    Making on-time payments is one of the most important things you can do to build your credit. Your payment history accounts for 35% of your credit score. It tells lenders and potential employers how reliable you are. Missed payments are serious signs of trouble. Charge offs and defaulted accounts say you can’t be trusted to repay your debts as promised.

    If you are newly establishing credit, avoid late payments and other poor payment habits. This is one of the two most impactful factors for building good credit. If you already have a poor payment history, commit to changing now. Over time, those old payments will have less impact. Eventually, they’ll even fall off your report.

    5. Use a Maximum of 30% of the Credit Available to You

    Ironically, lenders would rather not give you credit if it looks like you need it or you like using it too much. That may seem counterproductive, since they make their money off loan interest and fees. But using too much of your available credit is a warning sign.

    Maxing out your cards and lines of credit may point to problems with spending, debt and income. That worries creditors, since it means you may stop paying your loans. That’s why your utilization rate is a vital part of your credit score—accounting for 30% of the calculation in most scoring models.

    The most desirable utilization rate is less than 10% of your available credit. At most, keep it under 30%. If you make any large purchases on your revolving credit accounts, pay them off as quickly as possible to keep your utilization rate low.

    6. Open Different Types of Credit Accounts

    Having a mix of credit types is a good demonstration of creditworthiness. This factor contributes 10% to your credit score. There are three types of credit accounts to consider:

    1. Revolving accounts—credit cards and lines of credit. They have a credit limit and require regular payments.
    2. Installment accounts—student loans, car loans, mortgages and personal loans. The lender provides a lump sum, and you make payments until the debt is paid off.
    3. Open credit—charge cards, utilities and cellphone services. With charge cards, you have a credit limit, and you can make purchases and cash advances, but you don’t carry a balance. With open credit accounts, you need to pay off your charges each month.

    To build credit, work toward maintaining an account from each of these categories—as long as you can afford them.

    7. Open a Secured Line of Credit

    It may be difficult to build credit if you haven’t established a credit history yet. If you have poor or fair credit, it may also be hard to get approval for traditional credit cards or loans. However, secured lines of credit—like secured credit cards and secured personal loans—can help you get started on your path to good credit.

    OpenSky® Secured Visa® Credit Card

    Apply Now
    on Capital Bank's secure website
    Card Details
    Intro Apr:

    Ongoing Apr:
    17.39% (variable)

    Balance Transfer:

    Annual Fee:

    Credit Needed:
    Fair-Poor-Bad-No Credit
    Snapshot of Card Features
    • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
    • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
    • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
    • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
    • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
    • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
    • *View our Cardholder Agreement located at the bottom of the application page for details of the card

    Card Details +

    To get a secure line of credit, you will need to put up some form of collateral—usually cash, a savings account, or other personal property. With this credit option, you may get a decent interest rate. The lender’s risk is lowered due to your secured asset. This means they don’t need to charge a much higher interest rate, as is common with poor credit.

    8. Limit Credit Inquiries

    Be careful when applying for new credit. You don’t want more than two hard inquiries every six months or so. Too many requests for credit can look bad to potential lenders. These inquiries account for 10% of your score. Only apply for credit if it can help improve your score through one of the methods discussed above or is necessary for making a large purchase such as a home or car.

    When you do apply, comparison shop. Carefully weigh all the terms and the chances that you will qualify for the card or loan on offer. Then, choose only one or two and apply. If you’re turned down, don’t try again for at least six months.

    Build Your Credit

    These personal tips can help you build credit and work on improving poor or fair credit. Building good credit habits can have a bit impact on your credit score. Start by signing up for’s free Credit Report Card to get personalized advice for your unique credit situation.

    Sign up for the Free Credit Report Card.

      Get everything you need to master your credit today.
      Get started for free

      You Might Also Like

      What do you need your credit score for? In a nutshell, a lot. Cre... Read More

      March 17, 2021

      Building Credit

      Good credit is crucial to unlocking many financial opportunities ... Read More

      February 26, 2021

      Building Credit

      A woman in a bright red shirt smiles and looks at her cellphone while making notes in her notebook about building credit without a credit card
      Credit cards are a great tool for building credit. They’re ... Read More

      March 16, 2021

      Building Credit receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

      Hello, Reader!

      Thanks for checking out 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 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,, 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 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 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, 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 in general and they result in more traffic to us as well.

      Our Business Model’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, 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 are also able to register for a free 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, 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 You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and 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 Editorial Team