Five Tips That Anyone Can Use

These days, building good credit is the ticket to getting a lot of other good things—a car, a house, a cell phone or even a new job. On the surface, the badge of “good” credit might seem vague and elusive, but if you know how to build your credit, you’ll end up in a solid purchasing position.

Check your scores to know where you’re starting

You’re entitled to a free copy of your credit report from each of three major credit-reporting agencies: Equifax, Experian, and TransUnion, once each year. Request them at the FTC-sponsored website,, or call toll-free 1-877-322-8228. It’s a good idea to get a credit report from each agency and compare them, as a recent study by the FTC found that 25% of consumers had errors in one of their credit reports. 

According to, your FICO® Credit Score is calculated based on five factors, each carrying different weight in the overall equation. The percentages below are based on the five categories for the general population. 

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • How many types of credit in use: 10%
  • Account inquiries/New credit: 10%   

Focus on the fundamentals

While checking and savings account data isn’t typically reported to the credit agencies, lenders will look for these accounts, so it’s important to make sure you have them.

With your existing bills, do your very best to make every single payment on time. Pay at least the minimum due and ideally more if you’re able. Missing a payment will usually cause a creditor to charge you a fee and raise your APR. 

If life gets in the way and you absolutely cannot make a payment, call your creditor and explain your situation. They may be willing to work with you and extend your due date.

Monitor and manage your credit utilization (debt-to-credit) ratio

Your debt-to-credit ratio is defined by how much of your available credit is currently being used. This factor typically accounts for 30% of a FICO® Credit Score. Basically, it’s the amount of credit you’re using.

To figure out your credit utilization ratio on any credit card, you need to know your credit limit on that account. Typically it’s listed on your statement or you can call the credit card company to get this information. Divide your current credit card balance by your credit limit and multiply that number by 100. The resulting number is your credit utilization as a percentage. Credit companies will calculate this number across all of your open credit card accounts.

In general, a lower number is better. If you have multiple credit cards, you’re better off spreading the balance between them instead of loading up all your debt onto one card. According to credit expert John Ulzheimer, 7% is the average debt-to-credit ratio of people with FICO® Credit Scores over 7601.

Have a diverse portfolio of credit accounts

Credit cards, bank loans, retail accounts and mortgage loans are all considered when your FICO® Credit Score is calculated. While it’s great to have a mix of several types of accounts, it’s important not to open too many at once. Shop around and make sure your credit card gives you the best rate. And since length of credit history is also a factor, keep the accounts you have open and active if possible.

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Start with a secured credit card with a plan to graduate up to an unsecured card

You might be wondering how to build credit if yours isn’t looking so good at the moment. One good way to start is with a secured credit card, in which you deposit an amount of cash up front and then can charge up to your assigned credit line.

Be sure to charge only what you can pay for each month so that your credit utilization ratio remains low and you’re able to build a good payment history and establish good habits. It’s also a good idea to check with the issuer of your card to ensure they’re reporting this activity to all three major credit bureaus.

Like a cell phone or social media, a credit score is a reality of modern life. Supplied with the knowledge on how to build credit, all you need is a little attention to detail every month to make sure your credit score works for you and not against you.

Discover card believes that consumers should be equipped with the information they need to help them make informed credit decisions.


Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.

Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating. 

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