Build or Repair Your Credit with These 4 Tips

Person smiling while checking credit score on smart phone.

There are a lot of advantages to having good credit. People with higher credit scores usually receive better loan terms, such as lower interest rates and fewer fees, which can save a lot of money over the long run. And sometimes, your credit history is evaluated by potential landlords and employers, meaning a higher score can help you snag your dream job or apartment.

However, if you’re just starting out, you may have limited (or no) credit history. National Credit Education Month is the perfect time to take the following steps to help you start building credit. If you’ve taken a few financial wrong turns and need to get back on track, you can also use these tips to help repair your credit and start enjoying all the benefits of a higher score.

But first, let’s go over the basics.

What Is Your Credit Score?

Your credit score is a number between 300 and 850 that reflects your creditworthiness—or likelihood to repay your debt—to potential lenders. A higher score tells creditors that you are able to manage credit well.

Although the terms “credit score” and “FICO score” are often used interchangeably, a FICO® score is actually a brand of credit score created by the Fair Isaac Corp. in 1989. Some financial institutions also use VantageScore®, a credit score developed by the three major credit bureaus, to evaluate your credit risk.

How Is Your Credit Score Calculated?

A credit score is based on your credit history, which includes how many accounts like credit cards, student loans, and car loans you have open, the total amount of available credit you have used, and your credit repayment history.

People with fewer open accounts, lower debt amounts, and longer credit histories tend to have higher scores.

Why Is Your Credit Score Important?

A credit score is essentially your financial reputation. In fact, your FICO® score is used in 90% of lending decisions to determine whether your application will be approved and what rate you qualify for.

What’s a Good Credit Score?

In general, scores in the high 600s are considered good credit. Scores of 740 or higher will usually qualify you for the best loan rates and terms. That means you’ll pay less interest when you buy a car or house compared to someone with a lower score.

How to Get—and Keep—A Good Credit Score

Now that you know what a credit score is, how it’s calculated, and why good credit is so important, here’s a roadmap to guide you on your journey to better credit.

  1. Open a credit card. In order to build or improve your credit history, you’ll need to start with access to credit. You may not qualify for a traditional card at first, so consider a secured credit card This type of credit card requires a security deposit—if you default on your payments, the card issuer will get to keep your deposit. With a secured credit card, your available credit limit is usually the same amount as your deposit.
  2. Use your card (the smart way). Start by using your credit card to buy things you know you need and can afford to pay for immediately, like groceries or gas. By charging only everyday expenses (instead of making extravagant purchases or upgrading your lifestyle), you’ll minimize your risk of overspending and going into debt.
  3. Pay all your bills on time every month. This is really the most important factor that goes into determining your credit score. Typically, it takes about six months of on-time payments to have a positive effect on your credit history. On the other hand, making even one late payment can negatively affect your score (and require you to pay late fees). If you need help remembering when your bills are due, you can set up alerts or automatic monthly payments in Online and Mobile Banking.
  4. Pay your bill in full. If possible, paying off your credit card balance every month is best. Not only will this allow you to avoid paying interest charges, you’ll also keep your total debt levels down—which is another factor that goes into calculating your credit score. If you’re not able to pay the entire amount, make sure you at least make the minimum payment (or pay more, if you can).

After you’ve consistently made on-time payments and proven yourself to be a responsible borrower, you can apply for a regular credit card that doesn’t require a deposit. And, as you continue to display financial responsibility, your credit limit will likely increase, too, giving you more purchasing power.

Keep in Mind

Every time you apply to borrow money—whether it’s a with new credit card, car loan, or mortgage—the lender “pulls” your credit report. Each credit check is reported to the credit bureaus, and too many inquiries in a short amount of time will lower your score, so you should apply for credit only when it’s truly necessary.

Pro Tip for Parents

If you want to help your teen establish a positive credit history before they need to buy a car or start applying for student loans, consider adding them to your credit card as an authorized user. (It’s up to you whether or not you allow them to actually use the card to make purchases.) As long as you continue to use your card responsibly and make on-time payments, their credit score will start to increase as a result. They’ll benefit by getting more favorable loan terms when the time comes, compared to their peers with a shorter credit history.

Ready to Accomplish Your Goals?

As a not-for-profit financial institution, BluPeak Credit Union is passionate about empowering our members to live their best lives. We’re proud to offer free financial wellness resources, including one-on-one credit counseling through our partnership with GreenPathTM, to help you achieve your dreams and transform your life.



This information is provided for educational purposes only. All loans subject to credit approval. Must meet membership and account opening criteria. Mobile and data rates apply when using Mobile Banking.
BluPeak Credit Union is not affiliated with GreenPath Financial Wellness, who provides financial education and counseling services on our behalf. This partnership is available as free member benefit.

FICO is a registered trademark of Fair Isaac Corporation. VantageScore is a registered trademark of VantageScore Solutions, LLC.

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