Easy Ways to Build Credit
Building your credit is like putting extra money in your pocket, because the better your credit (aka, the higher your credit score), the more likely you are to secure loans, credit cards and financing options with better terms and lower interest rates. Your FICO credit score is based on the following five factors.
Timely payments (35 percent)
No. 1 tip for building good credit fast? Make your payments on time, every time. Your history of on-time payments is the most important factor that makes up your score. Even if you’re only making the minimum payment, do it on time.
Amounts owed (30 percent)
Try to keep the amounts you owe below 30 percent of your available credit. For instance, if the credit limit on your credit card is $1,000, try to keep your outstanding balance below $300. We know it’s not easy, but if your balance gets any higher, try to pay it off as quickly as possible.
Length of credit history (15 percent)
If you are new to credit, your credit history isn’t going to be very long—but it’s only a matter of time.
Credit mix (10 percent)
The different types of credit accounts under your name also play a key role. Your credit score could improve if you have both revolving debt (like credit cards) and installment debt (like loans) in your credit history—but don’t worry if you haven’t taken out any loans yet. You can still establish a good credit score with just credit cards.
New credit (10 percent)
How often do you apply for new credit? Try to wait three to six months between credit card applications to avoid lowering your credit score with too many new credit requests.
If you are new to credit, you may want to check your own credit score before you start applying for credit cards or loans. Many banks, such as Centreville Bank, give you access to free credit scores.
If you’re a customer of Centreville Bank, log into your free online banking service or download our mobile banking app to access SavvyMoney®. It’s an online tool to help you understand your credit score, get notified of changes, and get tips for improvement.
Timely payments (35 percent)
No. 1 tip for building good credit fast? Make your payments on time, every time. Your history of on-time payments is the most important factor that makes up your score. Even if you’re only making the minimum payment, do it on time.
Amounts owed (30 percent)
Try to keep the amounts you owe below 30 percent of your available credit. For instance, if the credit limit on your credit card is $1,000, try to keep your outstanding balance below $300. We know it’s not easy, but if your balance gets any higher, try to pay it off as quickly as possible.
Length of credit history (15 percent)
If you are new to credit, your credit history isn’t going to be very long—but it’s only a matter of time.
Credit mix (10 percent)
The different types of credit accounts under your name also play a key role. Your credit score could improve if you have both revolving debt (like credit cards) and installment debt (like loans) in your credit history—but don’t worry if you haven’t taken out any loans yet. You can still establish a good credit score with just credit cards.
New credit (10 percent)
How often do you apply for new credit? Try to wait three to six months between credit card applications to avoid lowering your credit score with too many new credit requests.
If you are new to credit, you may want to check your own credit score before you start applying for credit cards or loans. Many banks, such as Centreville Bank, give you access to free credit scores.
If you’re a customer of Centreville Bank, log into your free online banking service or download our mobile banking app to access SavvyMoney®. It’s an online tool to help you understand your credit score, get notified of changes, and get tips for improvement.