Take Control of Your Credit

Credit Building Guide

It’s rarely the case that anyone with poor credit is able to fix it overnight. The good news is our credit is entirely within our control, and there are simple, practical actions we can all take to build it. Similar to a fitness test, if we’re able to do a lot of crunches or run quickly for long distances, we’ll have a great score even if we don’t perfectly understand how the system scores it. The following is a guide to the practical actions we can all take, whether we perfectly understand the scoring or not. They’re broken down into actions you can take in the short and long term.

Short Term Actions

  • Check your credit report
  • Monitor your credit with an app
  • Utilize credit building tools

Long Term Habits

  • Never miss a payment
  • Pay overdue balances ASAP
  • Pay full credit balance every month
  • Be intentional when loan shopping

Short Term Actions

1. Check Your Credit Reports

As a reminder, there are three credit bureaus, each of which keep a credit report on you. Yes, you. You can get a hold of these credit reports through companies like CreditKarma or Experian, but the safest (and federally authorized) bet is to use annualcreditreport.com. During COVID-19 (don’t ask us to define that timeline), Americans can get a full credit report from each of the three bureaus, every week, for free. Typically, it’s just once a year from each of the bureaus. 

Important: Make sure you’re on the right site! We recommend using the link above to make sure you go the right website, but if you google it, make sure the page looks like the one below and your address bar indicates that you’re on a secure site. 

What You’ll See:
Composition of FICO 8 Credit Score
  • Oldest and Newest Accounts
  • Summary of Accounts by Type
  • Payment History for Each Account on File
  • Chronological Balance of Each Account
  • Length of Credit History
  • Average Account Age
  • Hard Inquiries
  • Soft Inquiries
  • Public Records
  • Collections

Understanding what makes a credit score

If you are interested in learning more about the components that make up your credit score. Check out our article on this important topic.

Disputing Errors

If you see anything that does not look right, look into it! If there are errors you find on your report, you can dispute them (which will never hurt your score) through whichever bureau’s report you noticed the error on. If there are errors on your credit report, they will continue to hurt you until you fix them. 

2. Use an App to Help Monitor

Reading your credit report is a great thing to do for all the reasons listed above. On a week-to-week or month to month basis though, it’s a lot easier to do a quick spot check on your credit using an app like CreditKarma or Experian. They’re both free, enable you to see your credit score, and give a brief synopsis of which things are helping and hurting. Again, we’re still advocates of looking at legitimate credit reports from time to time, but these two free apps are great for a five minute check during halftime or while waiting for your spouse to get ready to go out for dinner.


CreditKarma uses a Vantage Score while Experian uses FICO, so you’ll probably see a bit of a difference between the two. FICO is used far more frequently by lenders, but looking at both can help find what’s helping and hurting your credit. CreditKarma is the more user friendly of the two, and is usually within 10 points of what a lender will see when they pull your credit.

3. Credit Building Tools

If you’ve got little to no credit history, use a reliable, low cost service to start building it. There are some good products out there to help which predominantly fall into two categories.

Starter Credit Cards

These cards are simple and offer relatively few bells and whistles. They are easy to qualify for and are geared towards encouraging you to pay off your balance in full.


Microloans are a way to build savings. You choose how much to save, and make periodic payments towards that goal. Payments are reported to a credit bureau and build credit and savings at the same time.

There are many credit building tools out there. Some are good and others aren’t as useful. This is an important topic and we have a more in depth article on our recommended tools here.

Long Term Habits

1. Don’t Miss Payments. Ever. 

Anything financial that’s not automated is likely to be forgotten about eventually, whether it’s a mortgage payment or a monthly $20 transfer into a rainy day fund. Make sure the following accounts are set up to auto-pay so you don’t miss payments. Every payment you make on time helps a little. Every one you miss can hurt a lot. 

2. Pay Overdue Balances as Soon as Possible

This doesn’t need a ton of explaining. Anything that’s late hurts credit, often accrues interest, and causes financial and therefore personal stress. Do what you need to do to get it paid off. 

3. Pay Your Credit Card Balance in Full Every Month

We can’t overemphasize this. Nobody wants credit card debt, but far too many of us fall into it, especially when we get our first credit card and feel like the world is at our fingertips. We’ve all heard horror stories of young service members not doing this, and paying for it dearly. It’s incredible how quickly one can fall into $17,000+ of credit card debt and a credit score closer to a perfect bowling score than the 700s+. Set your credit card up to autopay the balance in full every month. 

4. Be Intentional About Shopping for Loans

There are two ways a lender can check your credit score:

Soft Inquiries

Soft inquiries are when someone views your credit score. They are not reported on your credit score and have no impact.

Hard Inquiries

Hard inquiries are a formal “pull” of your credit score. They go on your credit report for two years and can have a small negative affect on your score for a brief amount of time.

Hard inquiries are something to be aware of, but nothing to worry about… as long as you’re intentional about them. Hard inquiries that are incurred from applying for a mortgage or auto loan usually drop a score by a handful of points. However, you’re not typically penalized for multiple inquiries of the same kind if they’re done in a short time window, as credit bureaus and lenders understand you’re simply shopping around.

For example, a hard inquiry from three potential mortgage lenders in a week or two when applying for pre-approval doesn’t hurt your credit any more than one inquiry does. The same applies for auto loans. Generally speaking, you have between a few weeks and 45 days to shop around for mortgages and auto loans without multiple hard hits, depending on the credit scoring model.

Money Gouge Tip

Best practice when applying for credit that requires a hard inquiry is to have all your documents in order and an idea of which lenders you’re applying to. This gives you plenty of time to shop around without multiple hard hits, especially if you don’t get the rates you’re looking for from the first potential lender or two. 

Putting it All Together

  1. Rarely can we improve our credit overnight. However, our credit is in our control.
  2. There are actions you can take in less than an hour to get you on the right track.
  3. Simple actions over time can lead to a great credit score. Your hard work will pay off with lower interest rates on loans and mortgages.

Money Gouge

Two guys helping you make better financial decisions and understand the way money works.
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