How to Build and Improve Your Credit Score

by: holli casto
vp of training and development
Published 2/29/2024

Improving Your Credit Score: Where to Start 

If you're trying to build or improve your credit score, odds are that it is because you know your credit score is low. That said, do you know exactly where it's weak? If you haven't yet, make sure you have a copy of your credit report or look at your credit score through a credit monitoring service like My Credit Journey, which you have access to as a P1FCU member. You can also receive a free copy of your credit report from each of the three credit bureaus at These reports are free, but if you want to see your individual score from each agency, you may be able to get your score for free, but you may have to pay. Checking your own credit will not damage your credit because it is a soft inquiry.  

Once you have a copy of your credit report, review it to ensure there are no errors. According to a study by the Federal Trade Commission, 1 in 5 consumers has an error on their credit report! These errors can be significant enough to impact your credit score, be sure to review your report and dispute any errors. Read this article from the FTC for more information about the dispute process and how to file a dispute for free.

person looking at laptop
What contributes to a low credit score 

Once you've ensured your credit report is accurate, review it to see what areas you can improve on. Your credit report is broken out by types of credit accounts, revolving accounts, mortgage accounts, installment accounts, inquiries, and personal information. At the beginning of your report is a summary that breaks down your average account age, length of your credit history, and so on. When reviewing your report, identify which areas in your report based on the five areas that impact your score seem weakest. Remember, from most important to least, the five areas that impact your credit score are payment history, credit utilization, length of credit history, credit inquiries, and account mix. Do you have accounts with missed or late payments? Do you have a high utilization rate? Is your credit history relatively short? Do you have a lot of recent inquiries?  

READ: 5 Factors That Influence Your Credit Score

Develop a Plan of Action 

Any number of things can contribute to a low credit score; that said, the areas that weigh heaviest on your credit score are payment history, credit utilization, and length of credit history. When looking at your credit report, look at your credit utilization numbers and your average length of accounts. If your credit utilization is higher than 30% on your revolving accounts or your credit cards and lines of credit, try to lower your utilization. If you have a very short average length of accounts, make sure you have accounts open now that you plan to commit to for the long term.  

Now that you're well-versed in what your credit file looks like, you can develop a plan of action for how you will improve your score. The first step most of us can take is to lower our credit utilization. The best practice is to keep our credit utilization below 30%. Your credit score not only looks at your overall utilization but also how much you're using on each card, so if you're keeping a zero balance on every card but using 50% of your available balance on one card, consider spreading your balance out and paying that card down so your utilization is lower. You can also call your credit card companies and request a credit limit increase. They will frequently do this if you have a good payment history with them or have had a salary increase that you still need to report to them. That said, if you're not sure you can manage this higher limit without maxing it out, this may not be the best option for you.  

You can also consider taking out a debt consolidation loan, this will be especially beneficial if you carry a balance on several high interest credit cards. This will lower your utilization on your cards, plus you will only have one payment to manage, at hopefully a lower interest rate than the high interest rate that credit cards carry. While this will involve a hard inquiry on your report, bringing your capacity down to zero will outweigh the impact of any inquiry. With a consolidation loan like this, you just have to ensure that you don't rack up a high balance on your cards again.   

READ: Strategies For Paying Off Debt 

Next, make sure you are making on-time payments. On-time payments are one of the most important aspects of your credit score. If on-time payments are something you struggle with, see if you can set up autopayments to ensure your payment is made on time. If you need help to make your payment on time, contact the bank or credit union your loan or credit card is through and see if you can make arrangements that suit your needs better. You might be able to change your due date for a better time in the month, or you might even be able to lower your payment. 

Beyond these two steps, look for other areas of weakness on your credit report. If there is an account in collections, take care of the account if possible. When it is paid off, ask the agency if they will stop reporting to the credit bureaus. Some, but not all, agencies will do this.  

You can also get a credit builder loan or secured credit card. This will be especially important for anyone who does not have a credit history. Secured credit cards are credit cards that require you to put down a deposit for your credit limit. Once you've established a payment history, you will get your deposit back. You can also see about being added as an authorized user to a trusted family member or friend's credit card. You don't even have to use this card, but it will help build your credit history. You just need to make sure this relative or friend uses their card responsibly.  

Furthermore, you need to have patience. While some changes to your credit reflect instantly, most loan payoffs or other changes only update monthly. Improving your credit takes patience and determination, but it's well worth it in the end.  

person looking at computer

Understanding Credit Scores

Your credit score is essential to your financial well-being, but do you understand what it is?
person looking at computer

5 Factors That Influence Your Credit Score

What does and doesn't impact your credit score can get confusing. Get clarity on what makes the biggest difference.
couple hugging

How to Set Savings Goals That Actually Work

Goal setting is a key part of financial well being. This blog breaks down the fundamentals of goal setting.