Building a Good Credit Score

Step-by-step guide

1. 1

   Understand what affects your score

   Payment history (35%), credit utilization (30%), length of credit history (15%), types of credit (10%), and new credit inquiries (10%).

2. 2

   Always pay on time

   Payment history is the biggest factor. Set up automatic payments for at least the minimum amount. Even one late payment can drop your score significantly.

3. 3

   Keep balances low

   Use less than 30% of your available credit. If your limit is $1000, keep your balance under $300. Pay off balances in full each month if possible.

4. 4

   Check your credit report

   Get a free credit report from Equifax or TransUnion annually. Look for errors and dispute them immediately. Monitor your score with free tools like Borrowell or Credit Karma.