The other day my friend asked me at dinner what she should do in order to build her credit. Her boyfriend and her are looking to buy a house soon since they’ve lived in an apartment together for 3 years and want something of their own.

They are very responsible with their money, but have always paid for everything with cash. They have one credit card, and the limit is only $300, so she doesn’t have much to help her build her credit.

I then of course talked away about the numerous things she should or could be doing. I love spewing out lots of random financial knowledge 🙂

My credit score is a little under 800 right now. I hate that I am always thinking about my credit score and I let my life revolve around it, but I just want that number to be as high as it can get.

However, lately I have been guilty of signing up for credit cards for the rewards. Right now I have 3. But I don’t really care if my credit drops a little, because I don’t need credit for anything right now (I already have a house and cars). Also because my score won’t drastically drop by signing up for new cards. Does anyone advise against what I’m doing?

And then I thought some of you would probably want to know about it also! So that’s where we are today.

[Edited this sentence after realizing that others were not reading it the way I was trying to say it, sorry for the confusion] Having a good credit score can be useful in life. Unless you plan on paying for a house, cars, etc, all in cash, then credit is pretty much needed for these. A credit score allows banks and companies to gauge your riskiness to them.

Here are my tips:

1. Get a credit card. Only do this if you can trust yourself. A credit card can be a great tool if you want a good credit score. However, it can also lead to MANY bad things if you aren’t careful. So please don’t get a credit card unless you can use it responsibly. There are other ways to get credit if you aren’t going to be responsible with a credit card.

2. Keep your utilization rate low. Keeping your balances below 30% of what you can borrow is important. For example, if your credit card limit is $1,000, try not to have a balance over $300. This is the main thing that I try doing and your utilization rate has a big impact on your overall credit score.

3. Average account age is important. If you have a credit card that you’ve had for MUCH longer than others, I would recommend keeping it if there are no yearly fees, etc. that would otherwise make you want to close it.

You also don’t want to open up too many new accounts too quickly.  Your riskiness is also based on what your average account age is. So if most of your accounts are relatively new, that will not look the greatest to your potential lenders.

4. Pay your balance off every month and on time. It’s very important to pay your bills on time. Even if you have a low credit score, many banks will ask to see if you’ve ever been late for other payments such as your cell phone or utility bills in order to see how risky you are.

When we began looking for houses a couple of years ago, we had a low credit score, mainly because we were young and had not really thought about credit. We paid for nearly everything with cash. BUT, we had lived together for 2 years already, so we had a lot of bills that we were paying. Our lender asked us to give them proof that we had paid all of our bills on time. Because of this, we were able to secure our house loan and were approved.

5. Check your credit report. Make sure that there is nothing on your report that shouldn’t be there. This is really important! There are often mistakes on credit reports and unless you say something, they will stay on there.

I made a post last year on checking your credit report and the steps. Check it out! Below is a short summary of what I wrote.

Here’s what to do if/when you find an error:

1. You should be constantly checking items on your credit report, ESPECIALLY if you are like me and things like this keep on happening. I am “subscribed” to a credit reporting agency and I check mine every month.
2. When you eventually do find an error, contact the credit bureau where you found the error. You can call (to get more information on it) but make sure that you write. When you write, then include the date, your name, address and the problem.
3. If there is an error with more than one credit bureau, then do the same thing for all 3 credit bureaus.
4. Include a copy of your credit report and the page that has the error (make sure you don’t include any originals of anything).  Originals should of course stay with you.
5. Include your proof that this is not you. It was VERY hard for me to find proof that the house wasn’t mine. How was I supposed to prove that? I WAS 13. Who the heck remembers what they were doing on an exact day when they were 13? I was probably at school when I allegedly bought this house.
6. And then wait for a response

Be responsible. I want to say this again. Make sure that if you do decide to open a credit card in order to build credit, that you are extremely responsible. If you don’t think you’ll be good with a credit card, then there are other ways to build credit as well.

Related content: Everything You Need To Know About How To Build Credit

What are your tips for a great credit score?