Building Credit

Building Credit

A good credit score can open many doors and lead to great opportunities — but building credit can seem like a mystery at times. It’s not as straightforward as building savings, and the dots you have to connect can be tricky. Here’s a closer look.

What Goes Into Your Credit Score

  • 40% is your payment history. (Do you pay bills on time?)
  • 23% is your credit usage or utilization. (How much debt do you have?)
  • 21% is your account age. (A combo of your oldest account, newest account, and their average age. (Longer is better.)
  • 11% is your mix of credit. (Applying for too much credit in a short period of time shows you need money.)

Do’s and Don’ts To Maintain A Good Score:

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  • DO: Make it a point to pay all your bills on time.
  • DON’T: Miss a credit card payment- it can lower your score by 100 points or more.
  • DO: Keep your credit usage or utilization-(the percentage of credit you have available to you that you’re actually using) low.
  • DO: Check your credit reports from all three bureaus (Equifax, Experian, Transunion) annually at to be sure there are no errors or fraudulent acounts in your name.
  • DON’T: Open credit cards you don’t need (just to get the store discount).

$45,000: The amount a good credit score can save you in interest over a lifetime assuming you buy a home, car, have both student loans and credit cards.


Millennials and Credit Score

Millennials get a bad rap, but when it comes to credit, their picture is actually more of a mixed bag. According to a recent State of Credit Report, Millennials have increased their credit scores by four points on average over the past year. What else do we know about this generation and their credit?

They Take The Initiative

  • 79% of Millennials have a credit score according to LendEDU.
  • Just 21% have never taken a peek.

Many Could Use A Boost

  • More than half of Millennials have a credit score that is fair or poor.
  • Over 20 million members of this generation have no credit history with any consumer reporting agency.

Some Of Their Knowledge Is A Little Off Base

  • 44% percent of Millennials think they can build their credit by increasing their credit utilization.
  • 36% believe you can build your credit score by maxing out your card and then paying your credit card on time. (Falseee! Maxing out your card is never good. If you’re doing that consistently, ask for an increase in your limit.)
  • And 4.81% of millennials want a low credit score. (Oops! This is not a case where lower is better. In credit scoring, the closer you can get to 850, the better shape you’re in.)

Information published by SavvyMoney.