Building Credit And Credit Score

It’s possible that you may have heard about credit, both good and bad, and credit score. If you haven’t, it’s likely that you’ll encounter them at some point in your life.

Credit allows consumers to purchase goods and services before paying for them, assuming that they will be paid for in the future.

As a consumer, you may be a borrower who is trying to get a loan or establish some sort of other financial contract. Lenders will most likely evaluate you based on your credit score, which is a number based on a credit report that represents a consumer’s creditworthiness. Your creditworthiness, or credit score, can tell the lender how likely you are to make the required payments. From the lender’s perspective, borrowers with higher credit scores may be more likely to make their required payments on time in comparison to borrowers with lower credit scores.


Your credit score can be used to determine eligibility for multiple things. Here are a few of those things:

  • Loan qualification.
  • Loan lower interest rate qualification.
    • See learning resource Avoiding Debt under Finance to learn how having a lower interest rate can result in less compound interest and save you money over time.
  • Credit cards.
  • Cell phone contract.
  • Insurance.
  • Vehicle purchase.
  • Vehicle lending.
  • Apartment rental contract.
  • Home mortgage.
  • Student loans.


There are multiple factors that influence credit score. Here are some of those factors:

  • Number of late payments.
  • Severity of late payments.
  • Type of credit accounts.
  • Number of credit accounts.
  • Age of credit accounts.
  • Recent inquiries.
    • Running some credit checks can lower your credit score.
  • New credit applications.
  • Total debt.


Several actions exist which can damage your credit score. Here are some of those actions:

  • Skipped payments.
  • Late payments.
  • Co-signing.
    • If you co-sign for someone, you can be held responsible for any mistakes, like missed or late payments, and your credit score can be negatively impacted.
  • High balances relative to total credit limit.
    • Maxing out your credit card(s).
  • Applying for new lines of credit often.
  • Closing existing credit card accounts.
  • Avoiding credit or debt entirely.
    • Not building a healthy credit score.


There are multiple actions that you can take to build a healthy credit score. Here are a few of those actions:

  • Make 100% of your payments on time, every time.
    • This is not just with credit cards or loans. This includes all accounts such as medical bills, utility bills, and rent.
  • Maintain low credit utilization.
    • Try not to use more than 30% of your available credit.
      • Ex: If your credit card limit is $100.00, you’ll want to spend $30 or less.
    • Avoid opening new accounts, especially at the same time or near the same time.
    • Keep accounts open and active for as long as possible.
      • Unless financially unwise, such as an unused credit card with an annual fee.
      • Contributes to credit utilization (how much you use out of your total available credit) and length of payment history (how long accounts have been open/how long you’ve been making regular, on-time payments on these accounts).
    • Review your credit reports annually.
      • Check for any discrepancies/errors.
    • Request a credit limit increase.
      • This can increase your credit utilization rate (again, how much you use in comparison to how much credit you have available).
      • Remember to keep your spending at 30% or lower when you increase your credit.
    • A simple way to think of building good credit is to borrow money and pay it back on time, every time, keeping your balance low in comparison to your overall available credit.


Do your own research! No Longer Silenced Movement encourages you to do your own research about topics of your interest in order to formulate your own educated opinion.