Having a good credit score is important for getting approved for loans, credit cards, mortgages, and even renting an apartment. Your credit score is a three-digit number that tells lenders how risky or safe you are as a borrower. Scores generally range from 300 to 850, with higher scores being better. By taking some simple steps, you can start building and improving your credit score.

Check Your Credit Report

The first step is to check your credit report from all three major credit bureaus – Equifax, Experian and TransUnion. You are entitled to one free copy of your report every 12 months from each bureau. Go to Annual Credit Report website to request your free reports.

Review the reports carefully and dispute any inaccurate or erroneous information. Mistakes do happen, and you may find some negative items or accounts listed that are simply incorrect. Dispute these immediately in writing with the credit bureaus. This can boost your score.

Pay All Bills on Time

One of the biggest factors affecting your credit score is your payment history. Lenders want to see that you have paid past credit accounts and bills consistently on time. Payment history makes up 35% of your overall score.

Set up automatic payments or payment reminders when possible to avoid ever missing due dates on credit cards, utilities, cell phone bills, rent, student loans and other regular payments. If you have missed payments in the past, get current and then establish a perfect on-time payment record going forward.

Lower Your Credit Utilization Ratio

The second biggest factor is your credit utilization ratio. This is the amount you owe on all accounts divided by the total credit limits. It’s generally recommended to keep this ratio below 30%.

If you have high balances on credit cards, pay them down. You can also ask lenders for credit limit increases to lower your utilization. Spreading balances over more cards or getting a higher limit will reduce the ratio and improve your score.

Don’t Close Old Accounts

You may think closing old credit card accounts you don’t use will improve your score, but it can actually have the opposite effect. Length of credit history makes up 15% of your score, so closing old accounts hurts.
Keep accounts open, even if you don’t use them. Just charge something small every 6-12 months to keep them active. Cut up the cards if you don’t want the temptation to spend.

Mix Up Your Credit Types

Lenders like to see you can handle different types of credit, not just credit cards. Your credit mix makes up 10% of the score.

If you have credit cards and loans, your mix is already established. If you don’t have diverse credit types, you may want to take out an installment loan and make on-time payments to build your mix. Student, auto, mortgage and personal loans all count.

Check for Errors

In addition to disputing wrong or inaccurate information, also check your credit reports for errors. Make sure all accounts listed are actually yours. Look for correct account numbers, dates opened, credit limits and statuses.
If you see accounts that are not yours or find wrong information, dispute it with the bureaus in writing. Submit copies of supporting documents. This can give your score a nice bump.

Limit New Credit Applications

Every time you apply for new credit, the potential lender will check your credit report. Too many inquiries in a short timeframe can negatively impact your score. Apply for new credit selectively.

Also, don’t open a number of new accounts rapidly. New accounts lower your average account age, which makes up 10% of the score. Apply selectively for accounts you need and will use responsibly.

Monitor Your Score

Checking your own score will not hurt it. Stay updated on your credit by checking it at least every few months. Many credit cards and personal finance websites offer free credit scores and monitoring. Monitoring ensures you catch any suspicious activity or errors early.

Keep practicing these steps, and your credit score will start improving. Be patient, as it takes time. With diligent credit management, you can build an excellent score to set yourself up for financial success.


Having good credit opens up more options for loans and credit cards, while also leading to lower interest rates. By monitoring your credit reports, paying bills on time, keeping credit card balances low, retaining old accounts, limiting credit checks and correcting errors, you can take control of your credit and build an impressive credit score. Healthy credit habits will serve you well throughout life.