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The Smart Way To Build Credit

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Your credit score plays a vital role in your financial life. Bad credit means it’s very unlikely that you’ll qualify for any loan or credit card. Though it’s pretty easy to build credit when starting out, many people struggle with bad credit from the very beginning.

Here’s the smart way to build credit. Just follow these steps to improve your credit score.

1. Pay Bills on Time

Your past payment performance is a major factor in determining your credit score. Late payments can affect your credit for as long as seven years. Therefore, never forget to pay bills on time. It’ll certainly improve your credit score over time. A bill can be any kind of payment with a due date and not just a credit card bill.

2. Keep Credit Utilization Ratio Low

Credit Utilization Ratio is the ratio of the credit you charge per month and your total credit limit across all your cards. A low ratio, around 20-30%, positively affects your credit score. Therefore, if your monthly credit limit across all your cards is $10,000, keep your bank statements total to less than $3000. It’ll let the lenders know that you aren’t maxed out of your credit limits. And also that you know how to manage credits. Keeping your unused credit cards open is a good trick to keeping your credit utilization ratio low.


3. Keep Distance From Too Many Hard Inquiries

It’s another important factor in determining the credit score.

Applying for every new credit increases the number of hard inquiries on your credit report by one. Too many hard inquiries can highly damage your credit score. They stay on your credit report for 2 years. Though they become less effective with time, creating multiple hard inquiries is never a good option if you’re looking to build credit.


Generally, there’s no quick way to improve credit score. It certainly takes some time. Just keep your credit report away from negative information and the credit will improve itself. Considering the value of credit scores to our financial well-being, it’s really important to keep our credit as good as possible.

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