Building an excellent score will take longer — but it’s within your reach. All it takes is dedication and sticking to good spending habits.

Here’s how to start building a good or even stellar credit score.

Understand how credit bureaus calculate your score

Thirty-five percent of your score is based on payment history
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Thirty-five percent of your score is based on payment history alone.

Your credit score is based on the quality and length of your credit use and repayment history. Your credit score is an indicator of how likely you are to repay debt, and banks and other creditors refer to it before approving you for loans or raising your credit limit.

Not sure where your credit score stands? Get a free credit score from Credit Sesame.

Credit scores come from the three major credit reporting bureaus, Experian, TransUnion and Experian, which also issue credit reports. Credit scores have traditionally followed the FICO system, which assesses your credit risk on a scale from 300 (poor credit) to 850 (excellent credit).

FICO credit scores rely on each person’s unique payment history and debts but don’t take into account factors like income, employment, race, age or gender.

Here's a breakdown of what FICO scores are based on:

  • 35%: Your payment history.
  • 30%: The amounts you owe.
  • 15%: The length of your credit history.
  • 10%: Your new credit.
  • 10%: Your credit mix.

So, if you want to improve your credit score, you'll need a long and successful credit history with regular on-time payments and low credit card balances. All of that is worth 80% of your score.

Having lower balances on your cards means you’re not using all of your available credit — that is, you have "low credit utilization." The credit bureaus see that as proof you’re good at managing your credit and not overspending.

Because credit scores measure your behavior over time, it can take several months or more for credit bureaus to catch on to improved trends in your spending and repayment habits and raise your credit score accordingly.

How to get a solid start on building credit

Adult woman and daughter shopping online with credit card and laptop
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When you're just starting out, you might become an authorized user on a parent's credit card.

In order for you to be given a credit score, you need some history with credit and repayment. If you haven't taken out a credit card or used other credit products just yet, it will take a while for the credit bureaus to "get to know you" and rate you.

Here are several reliable methods to build a good credit score, whether you're young and just starting out or are recovering from financial difficulties that wrecked your credit.

Become an authorized user on a family member’s credit card. Your parent, spouse or sibling can call their credit card company and ask to add you as an authorized user on a card. This will work only if your family member's account is in good standing.

Once the request is approved, you will receive a credit card linked to the account that you can begin to use.

It’s important to note that your debts on the card cannot be paid directly by you. Instead, your family member — the main account holder — is responsible for paying the bills. As long as this person has a good credit history and doesn’t miss payments, your relative's good credit standing will positively impact your credit score.

Once your score starts looking sharper, you should apply for your own credit card and keep building on your good foundation.

Get a secured credit card. Building credit from scratch is easy using a secured credit card.

A secured card requires you to make a deposit as collateral. For example, if you want to be approved for a secured credit card with a $500 limit, you'll need to give the credit card issuer $500 to hold for you.

If you fail to make a payment, the money will be taken from the deposit.

The advantage of a secured credit card is that the issuer will report your activity to the credit bureaus every 30 days. This means that on-time — and, ideally, full — payments every month will help build your credit score consistently.

Get a credit builder loan. With credit builder loans — such as those available from Credit Strong — you borrow an amount of money that's locked away in a savings account. Over time, you repay the loan and pay interest.

Once you’ve paid off the loan, the savings account is unlocked and you have access to the money.

It's a great way to build credit because the lender will report your payments to the major credit bureaus, which will boost your score by building a good payment history. Plus, you’ll leave the program with a sum of cash.

Report your rent or utilities payments. If you’re already paying rent and/or utilities, it may be possible to use your monthly payment history to boost your credit score.

Simply contact your landlord or utilities provider and find out if your payments are reported to the credit bureaus. If not, ask if it's something that can be done.

Habits to avoid while trying to build credit

To build credit faster, spend wisely and make monthly payments on time
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To build credit faster, spend wisely and make monthly payments on time.

Here are several ways your credit-building efforts can stumble:

If you don't make payments every month. When you miss making payments on your credit card or other loan for 30 days, your account is labeled "delinquent." This has an immediate negative impact on your credit score.

If you're late with your payments. Even making a late payment every so often can hit your score where it hurts.

Avoid this issue by checking your statements and noting which day of the month your bills become due. Set reminders to make payments a few days in advance each month.

If you've got too much debt in relation to your income. Having more debt than you can afford does not directly affect your credit score if you’re making regular payments on time.

But lenders check how much debt you're carrying and may ask about your income when you apply for loans. You're more likely to be denied a mortgage or other important loan if they see a too high debt-to-income ratio.

If you're using too much of your available credit. Credit utilization is an important factor in calculating your credit score. It’s recommended that you keep your credit usage to a maximum 30%.

How this works: If you have two credit cards each with a $5,000 limit (a total of $10,000 together) and you have $5,000 in debt between the two cards, then you are at 50% credit utilization. You’d want to drop the total debt on the cards to no more than $3,000 (that is, 30% of $10,000).

If you apply for new credit too often. Your credit score can be negatively affected by credit-check inquiries, which happen every time you apply for a new credit card or loan.

If you apply for too many credit products, the credit bureaus may think you're in danger of overspending on your existing accounts and are desperate for more credit. This is considered risky consumer behavior and will result in your credit score dropping.