Your credit score is more than just a number—it's a critical factor that may impact your finances. From securing low interest rates on personal loans to leasing an apartment, your credit score plays a pivotal role. If you're a new credit user, you might wonder how to build and improve credit. Here are six strategies that can help boost your score over time:                                                              

1) Make Your Payments On-Time

Late payments may negatively impact your creditworthiness. To ensure timely payments, consider setting up automatic payments or reminders. Try making it a habit to pay at least the minimum amount due on all your accounts by their respective due dates. Consistency with on-time payments may demonstrate your financial responsibility and reliability to creditors.

2) Keep Your Utilization Low

Credit utilization is the percentage of the available credit that you're currently using. To maintain a healthy credit score, it's essential to keep your credit utilization low. A good rule of thumb is to aim for a utilization rate of less than 30%. For example, if you have a credit card with a $1,000 limit, try to keep the balance below $300. High utilization may signal financial strain, potentially lowering your credit score. Regularly monitoring your credit card balances and paying them down may help keep utilization in check.

3) Increase Your Credit Limit

Another way to reduce your credit utilization, which will increase your credit score, is to raise your credit limit while keeping your spending stable. By requesting a higher credit limit or applying for additional credit cards, you may lower your utilization rate. However, make sure to exercise caution when requesting credit limit increases, as they can lead to hard credit inquiries. Getting too many hard inquiries can negatively impact your score.

4) Become an Authorized User

If you have a close friend or family member with a well-established credit history and responsible credit usage, consider becoming an authorized user on their credit card account. When you get added as an authorized user, the account's positive history might be reported to the major credit bureaus: Transunion, Experian, and Equifax. If you become an authorized user, the way you use someone else’s credit card will affect their credit history too, so be sure to pay off anything you put on the card.

5) Diversify Your Credit

Your credit score grows stronger with a diverse mix of credit types on your report. A good credit mix may include revolving accounts, such as credit cards, and installment accounts, like auto loans or personal loans. Having various credit types may demonstrate your ability to manage different financial responsibilities. However, don't open or apply for too many accounts at once, as this may hurt your credit score.

6) Get a Secured Credit Card

If you're struggling to qualify for traditional credit cards due to low or no credit history, a secured credit card may be a valuable tool. This card requires you to make a deposit as collateral, which typically determines your credit limit. These cards are easier to obtain, even for those with limited credit. As you make on-time payments, you can build a positive credit history.

The Bottom Line

Improving your credit score is a process that requires patience and responsible financial behavior. But by following some of the tips outlined above, such as making on-time payments and keeping your utilization low, you may expedite your score’s growth. Remember, the key is patience and discipline. Over time, your credit score may reflect your financial responsibility, potentially making it easier to achieve financial goals and secure the loans and credit you need at more favorable terms.