Strengthen your credit and lay the groundwork for opportunity
Your credit score is a key part of your financial well-being. It reflects how reliably you manage money and can influence everything from interest rates to housing applications.
But credit isn’t just a score, it’s a long-term story of your financial habits. Building strong credit doesn’t happen overnight, but with consistent actions and awareness, it can become one of your greatest financial assets.
Understanding credit and why it matters
Credit is the trust a lender has in you. The belief that you’ll repay what you borrow. It’s reflected in both your credit report (a detailed record of borrowing and repayment activity) and your credit score (a single number that summarizes that history).
A high score can unlock lower interest rates, better loan terms and access to housing or employment opportunities. A lower score may result in higher costs or limited options. Understanding how credit works gives you the power to improve it and your financial flexibility.
Your score is determined by five key factors:
Payment history: Shows how consistently you pay your bills on time. Even one missed or late payment can have a big impact, so reliability is the most important factor in maintaining good credit.
Credit utilization: Measures how much of your available credit you’re using. Keeping your balances below 30% of your total limit demonstrates healthy spending habits and improves your score.
Length of credit history: Reflects how long your credit accounts have been open. Older accounts help your score by showing lenders you can manage credit responsibly over time.
Types of credit: Looks at the mix of credit you use, such as credit cards, student loans, car loans or a mortgage. Having a variety of accounts and managing each well can strengthen your profile.
Recent credit activity: Tracks how often you apply for new credit. Too many applications in a short period can lower your score temporarily, as it may signal higher risk to lenders.
Of these, payment history and utilization carry the most weight. Even small, consistent improvements, like lowering balances or making payments early, can steadily move your score upward.
How to build and strengthen credit over time
Credit improvement is gradual; it’s built through everyday financial choices. The most important step is reliability: making payments on time, every time. Even one missed payment can linger on your report for years, so automation is your best ally. Setting up reminders or autopay ensures consistency and protects your progress.
Your credit utilization ratio, or how much of your available credit you use, is another key factor. Aim to keep it below 30%, or even lower if possible. If you have multiple cards, spreading balances evenly can help maintain a healthier overall ratio.
Length of credit history also matters. If you’re tempted to close an old card after paying it off, consider keeping it open (especially if it doesn’t charge a fee). Older accounts extend your credit age and add stability to your profile.
When building new credit, apply sparingly. Each application generates a “hard inquiry,” which can temporarily reduce your score. Spacing out applications shows lenders that you’re deliberate, not dependent on new credit.
Protecting and monitoring your credit
Review your credit report at least once a year to ensure accuracy and detect any potential fraud. You can access free reports from each of the three major bureaus: Equifax, Experian, and TransUnion through AnnualCreditReport.com.
If you spot unfamiliar accounts or suspicious activity, contact the lender immediately, dispute the entry with the credit bureau, and consider placing a temporary fraud alert or credit freeze on your file. Using strong passwords and enabling two-factor authentication adds another layer of protection for your financial data.
Getting started if you have no credit history
If you’re new to credit, the goal is to show lenders you can borrow responsibly. Start small. A secured credit card, which requires a refundable deposit, can be a safe way to begin. Use it for small, consistent purchases and pay it off in full each month.
Another option is to become an authorized user on a trusted family member’s credit card. This allows you to benefit from their positive payment history while learning the basics of credit management. Some credit unions and banks, including BECU, also offer “credit builder” loans designed to help you establish a score over time.
However, it’s important to use discretion and clear communication when sharing credit responsibility. If you become an authorized user on someone else’s account, or add someone to yours, both parties’ actions can affect credit scores. Choose only trusted relationships, set clear expectations and regularly review account activity to protect both your credit and your relationship.
Watch and learn
Find a variety of webinar recordings in our Financial Education playlist on YouTube.