Starting Out: How To Build Your Credit Score

We get asked frequently by friends and acquaintances who are starting out, how can they build their credit score (in order to purchase a home or a car with a loan later on down the line). Many of them may have begun their credit building career recently.

So what can you do to BUILD your credit (AKA: FICO) score when you are just starting out as a credit-worthy borrower? We’ve got our top 3 solutions for you!

As you can see from the chart below, your CREDIT HISTORY is the largest portion that makes up your credit score. So time (the number of years you have been a credit-worthy borrower)  is the largest weight of your score.

FICO Credit Score


If you currently have one credit card and are paying that off in full each month, that is awesome! I would continue to do so. Beyond the amount of time you’ve been a borrower, there are two other things you can do to increase your FICO score over time.


Keep your balance low by either reducing the number of purchases you make on your card or by increasing your current line of revolving credit on your credit card. The thinking is, when you are responsible for a higher amount of potential debt, and yet show that you continue to pay off your card in full each month, that looks favorably upon you as someone who is responsible and can be trusted to manage more debt.


If you have one credit card, you can open up a second line of credit (a second credit card). Once again, the thinking is that you are responsible for a higher amount of debt (i.e.: $5,000 credit limit on Credit Card A & $3,000 credit limit on Credit Card B). Each credit card can cater to your benefits (i.e.: mileage points with an airline that you fly on regularly, or a credit card that offers high cash back rewards incentives). It just depends on what you want from that credit card. Pay off both credit cards in full each month (or whenever you use it) and with time your FICO score will strengthen. Personally, I wouldn’t have more than two credit cards opened in your name. Anymore than that is excessive and it becomes difficult trying to manage which payments are due when.

Granted, this is just our two cents based on what we have done personally based on what we have learned over the years about credit.

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