Building Up Your Credit Card Scores and Why They Matter

A guide for beginners and those who need to repair debt

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No matter how you feel about your credit score (FICO®) number, it makes a big difference when you want to buy large ticket items, such as a house or car, to finance your education, rent an apartment, or even get a job (yes, some employers check people’s financial health). Not only does your credit score number make a difference on those big ticket items, but they also drive the interest rate you’ll pay on loans (the higher the score, the lower the interest rate, to a point).

Building a good credit score can be confusing and overwhelming. Even I have a difficult time understanding how credit scores work. So, I broke it down here and want to share it with you.

What’s the average credit score

The first thing is to understand the basics of a credit score and figure out where you stand on your credit. You can only fix something if you see where it’s broken in the first place.

Credit scores range from 300–850. Why don’t they start at zero and make it easy on everyone? I don’t know.

The average score in the U.S. is 703, but really the average score is broken down into age groups. The older you are, the more established, therefore having higher scores. (source)

The best way is to check on your score through the three big credit entities, Equinox, Experian, and TransUnion. Each of these companies use their own scoring models, so you won’t get an exact same score across the board.

You can get a general number range, but remember that creditors and lenders look at different types of scores, depending on why they are lending you money. But, we aren’t going to get into that, it’s complex. A “number” will give you a place to work from, and you can do some general credit score repairing.

Once per year you are allowed a free credit report from each of these companies. To order your credit reports, The Federal Trade Commission (FTC) provides some fantastic information how to do this here. Go to the page and follow the directions about how to order your report, or go directly to

Once you get your score, you can work from there to improve your score.

Here’s what the credit bureaus look at:

Payment History: Payment history is the most important aspect of your credit report and shows whether you have paid your credit accounts on time.

Amounts Owed: How much debt you have is is the second most important category, including the evaluation of how much of your available revolving credit you are using each month.

Length of Credit History: The length of your credit history is based on how long you have had credit accounts open. A more established credit history usually equates to lower risk.

Recent Activity: This category looks at how many “inquiries” you have, how many times you have applied for credit in the past 12 months.

Credit Mix: Your credit mix is based on how many different types of credit accounts you have, including mortgages, credit cards, auto loans, and installment loans. (source)

It kinda sucks, but if you have no debt your score can actually be worse than if you have debt. That’s because they score you strictly on how you manage your loan debt. With this in mind, let’s look at ways you can keep yourself out of as much debt as possible and increase your credit score.

Review your credit report for errors

There are the most common errors according to Consumer Finance Protection Bureau: Personal information, reporting of account status, balance errors, and data management errors.

You will need to comb through your reports and determine if dispute an error on your report, which you can accomplish online, by letter, or over the phone, depending on the agency and their instructions to submit a dispute.

Carry a loan and make your payments on time

Like I said, credit reports work because you have loan debt. If you’re able to get a small loan on a car or home, then pay it back on time. If you have trouble making timely payments, you not only slip in your credit score, but incur high interest rates and late fees. For any of your loans, be sure you pay on time. Many people probably understand this, but it’s always worth mentioning.

Use your credit card this way

Getting a secured credit card can be a good option if you have difficulty paying your credit card bills, because you make a security deposit towards the card which reduced risk. But, if you have a credit card, keep it at zero, with small charges that are paid off immediately. This is the best way to use your cards if you use them at all.

Whatever you do, don’t carry a balance, and certainly don’t max out your credit card.

Become an authorized user of an established account

Parents may do this for when their kids enter their early adulthood, by adding them to their credit account. This gives a jump-start to good credit, and it’s the easiest, fastest way to establish good credit.

Don’t close old accounts

Credit companies like older, established accounts, so keep your older credit card accounts open. This will show you have longevity in your credit history.

Keep your debt down, or at least work on paying it down

You ideally want your debt ratio (total debt to total assets)to be about 30%. The best way to increase your score is to pay down your debt. This can be a huge undertaking, but also your biggest task with your money. You’ll feel more freedom when you have very little debt.

If you’re planning to make a major purchase (car, home), then save yourself from making any other inquiries on your credit. That means don’t get another credit card or another loan, it’ll reflect badly on your credit report and may delay you getting a much-needed loan for your future.

Written by

Advocate for Women / Editor of The Virago

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