Building good credit is central to managing your finances and planning for the future, so it’s no surprise that improving our credit score is at the top of our personal finance to-do list.

But sometimes, improving your credit score seems to take forever.

No doubt about it — building credit takes patience. But if you apply yourself and follow a few easy steps, getting a better credit score should be well within your reach.

Understanding credit

Think of your credit score as a snapshot of your credit history.

Financial institutions and credit card issuers use your score to determine your risk level when they consider you for a loan or credit card. The higher you sit on the credit score range of 300 to 850, the lower your risk to potential lenders.

Most lenders use a score compiled by Fair Isaac Corporation (FICO). While the details of FICO’s credit scoring models are proprietary, the following breakdown can give you a rough idea of how much each part of your credit history counts toward your credit score:

Payment history (35 percent)

Your payment history reflects your tendency to make your monthly payments on time. This includes payments for credit cards, lines of credit, student loans, car loans, and other personal loans. If you fall behind on your payments by 30 days or more, your credit score takes a hit.

Credit utilization (30 percent)

The amount of your available credit that you use at any given time determines your credit utilization ratio. That means that if you’ve spent $500 on a credit card with a $5,000 limit, your utilization ratio is 10 percent. To maintain a good credit score, keep your utilization ratio below 30 percent.

Length of credit history (15 percent)

Although a longer credit history doesn’t automatically lead to a better credit score, it tends to include more evidence of timely payments and makes an overall better impression than a shorter history.

New credit (10 percent)

When you apply for a credit card or loan, lenders inquire into your credit report, which docks a few points from your credit score.

Credit mix (10 percent)

Your credit mix refers to the variety of different types of credit accounts you have, like credit cards, lines of credit, and different types of loans. The more variety, the better your score.

Why is it important to maintain a good credit score?

A good credit score tells lenders you’re a reliable borrower with a low risk of missing payments, which gives you several advantages.

Here are some of the most noteworthy perks of having a good credit score:

Easier credit approval

Banks and lenders will be more willing to extend credit to you when you have a high credit score. You’ll be accepted for loans and credit cards faster and easier.

Lower interest rates

In addition to getting you approved easier, a good credit score helps you get lower interest rates. Less money spent on interest means more money for you.

Better financial products

A good credit score improves your chances of accessing exclusive financial products, like higher credit limits, bonus cash-back programs, or low fixed-rate mortgages.

Improve your chances of renting a home

Your credit score also gives landlords an idea of your likelihood to pay your rent on time every month. A good score improves your chances of getting a good lease and can save you money on a security deposit.

Receive better car and home insurance rates

Some states allow insurance companies to factor in credit scores when determining insurance premiums. A better score means you’ll save money on monthly premiums.

How long does it take to build credit?

Building a credit score from scratch can take anywhere from one to six months. While your credit score is established within a month or two of getting your first credit card, it takes at least six months to generate a FICO score, which most lenders use to determine your risk factor.

However, rebuilding your credit after a slip in the ratings is a different story.

How long it takes to improve your bad credit score depends on where you’re starting from and where you want to get. The highest credit scores take years of excellent behavior to reach. But don’t despair. With the right tools and some careful planning, you’ll be on your way to excellent credit in no time.

Here are some of the best ways to rebuild credit:

Credit rebuilders

Credit rebuilders are financial tools designed to help you get your credit score back on track. They include secured credit cards, low-limit credit cards, and credit-builder loans.

Secured credit card

Secured credit cards require a cash deposit to cover the debt, which results in almost no risk for the lender.

Low-limit credit card

Low-limit credit cards don’t require a high credit score or up-front cash like a secured card.

Credit-builder loan

Credit-builder loans allow you to deposit money into a separate account and receive a loan that matches the deposit. You then repay the loan in installments (plus interest) over a fixed term. When you’ve paid it off, you get your deposit back.

Alternative payment methods

Other payment methods, like PointCard™, give you the perks of a credit card without credit checks or interest rates.

A transparent, easy-to-use alternative payment card, PointCard allows you to spend your own money while also receiving exclusive benefits, including unlimited cash-back on all purchases and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases. You also receive fraud protection with zero liability, no interest rates, and rental car and phone insurance.

Become an authorized user

By becoming an authorized user on a friend or family member’s credit card account, you can quickly start building your credit history, even if you don’t spend very much.

Cell phone and utility bills

You can add utility and cell phone accounts to your credit report with a free program called Experian Boost, and your credit score will improve every time you pay your bills on time.

4 ways to protect your credit score

The good news is that maintaining a high credit score is often easier than building or rebuilding credit. But there are still some important steps to follow to ensure your credit stays where you want it.

1. Monitor your credit reports

Each of the three major credit bureaus — Equifax, TransUnion, and Experian — allows you to request a free copy of your credit report once a year. Carefully review your reports and dispute any errors you find with your credit bureau or lender.

1. Pay your bills on time

One of the best ways to maintain a good credit history is to pay your bills before their due date and avoid missing payments.

1. Keep credit utilization low

Paying your credit card balance often helps keep your credit utilization low. One way to improve your utilization ratio is to increase your credit limit.

1. Apply for new credit sparingly

Lenders perform a hard inquiry into your credit report every time you apply for a new credit account or loan, so only apply for credit when you need it.

The bottom line

If you’re worried about your credit score, you’re not alone.

Although building good credit takes time, anyone with the right credit habits and a bit of patience can achieve their goal of a better credit score.

If you’re looking for a tool to help get your credit score into shape, try PointCard™.

Join Point now.

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