Strategically Strengthen Your Credit Score

Whether you’re establishing credit for the first time or working to bounce back after a financial setback, with a little focus and consistency, you can build a strong score. Before building a strategy, it’s best to know the basics. Check out Mastering the Influential Three-Digit Number for a high-level look at how credit scoring works.
Ready to talk strategy? Let’s dive in!
 

Start Building Where You’re At

When you have little to no credit history, lenders have nothing to evaluate, making it hard to know if you’re a trustworthy borrower. If you're brand new to the credit-building game, here’s where our team suggests you start.
 

• Secured Credit Card: This type of credit card is more accessible for beginners because it requires a refundable cash deposit (which typically becomes your limit) that serves as collateral, making it easy for your credit union to approve your application. You’ll use it like any other credit card, helping you boost your score with on-time payments and low utilization.
• Small Auto Loan: Another path to building credit is through a small auto loan. This route typically requires a down payment and a co-signer with established credit. 

Consistency is key. You don't need a high credit limit or expensive loan to build credit effectively.
 

Habits That Move the Needle

Building credit and developing good habits go hand in hand. Once you have credit accounts open, your behavior determines if your score rises or falls. Here are a few habits to get you on the right track.
 

• Pay on Time, Every Time. Even one missed payment can damage your credit score when you’re starting. Pro tip: Set up automatic payments so you never miss a due date.
• Keep Your Balance Low. Figure out what 30% of your credit limit is and try to stick below that. The lower your utilization, the better!
• Track Your Progress. BHFCU members have free access to our Credit Monitoring tool. Learn more about your credit metrics at a glance and actions you can take to improve your score, among other things.
• Limit New Applications. An application for a new loan or credit card triggers a hard inquiry, which can dip your score. Be thoughtful about when and why you apply. 
• Celebrate the Wins. Big or small, a win is a win. Did we mention you can set goals and track your progress with Credit Monitoring, too?
• Be Patient. Building solid credit takes time, period. The most important thing you can do is start and keep working at it, one opportunity at a time.

You’ve Got This

The adage ‘it’s a marathon, not a sprint’ applies perfectly to the process of credit building. Once started, many see meaningful improvement within 6 - 12 months of consistent action. We’re here to help when you’re ready!

There’s more where that came from. Check out our other credit-related blogs here.