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Starting Your Credit Journey & Establishing Credit

Starting Your Credit Journey & Establishing Credit


Starting Your Credit Journey & Establishing Credit

Have you ever wondered how long it may take to build or improve your credit score? Here are a few tips from our experts, whether you’re just starting out or want to improve a low credit score.

Jump over to our CSE Couch chat with our Assistant Manager of the Lending Contact Center to discover more about establishing your credit.  Or, continue reading...

To start, let’s explain what is credit and credit score. A credit score is a numbered rating between 0 – 850 which represents the perceived ability of a person to fulfill their financial commitments based on an analysis of their credit history and current financial circumstances. A good score is typically a number of 720 and above. There are multiple factors that make up a credit score which include:

  • Payment History – the most heavily factored portion of your credit score is the history of how you’ve paid your loans and credit cards. Just one missed payment can have a large negative impact on your score.
  • Capacity – Your amount of available credit, or the balance/usage of your credit limit. This is the next most important factor. A good rule of thumb is not to use more than 30% of your available credit limit on open-ended credit such as credit cards or lines of credit.
  • Length of Credit History – the length of time you’ve held a credit account. Are you new to the ‘credit world’ or have you been around a while?
  • Credit Mix – A diverse mix of credit such as credit cards, loans (auto or personal), mortgages, student loans, etc. Having different types of credit helps to illustrate how well you manage different responsibilities.
  • New Credit / New Lines – the number of new credit accounts opened. Limit how often you apply for credit. It’s not a great idea to open many accounts in a short period of time. If you’re enticed with a store card promotion for a certain percentage off of your purchase, it may not be worth it in terms of how it could negatively affect your credit score.


Why does credit matter?

There’s good reason to establish credit, but it’s just as important to continue to monitor and improve your credit. Taking care of your credit history and score greatly improves the ability to get approved for loans and credit when you need it. Having good credit also saves you a significant amount of money because you likely pay a lower interest rate.

On the flip side, there are a few downsides to having no credit or a low score. The biggest issue is that you run the risk of getting denied loans when you need financial help. If you are fortunate enough to get approved, you’ll likely be paying more by way of a higher interest rate. And, it’s more than just lenders who might turn you down; landlords, employment, cell phone companies, and other consumer needs may be impacted as well.

Now that you understand a little more about credit and your score, you may be wondering how long it takes to improve your credit score. The length of time it takes to improve your score, all depends on whether you’re establishing your credit score from scratch or, if you have a score, what led your score to get to where it is.


Starting from scratch

The amount of time it takes to build a credit score when you’re just starting out and have never had credit is typically three to six months of regular credit activity.

One of the first steps many consumers take in establishing credit is getting and using a credit card. Unfortunately, a reason for not getting approved for a credit card would be because they don’t have any credit! But, one option to get around that would be to get a secured credit card in order to start your credit journey. A secured credit card is where the lender secures or holds the funds on deposit (not accessible to spend) that match your credit limit. The secured funds give the card issuer security and a guarantee to prevent losses when issuing cards to new cardholders with no credit. If you were to use the card but couldn’t pay it back there are funds available to pay the balance.

Using a credit card appropriately, not utilizing over 30% of your limit, not going over the limit, making your payment on time, and paying it off regularly each month can help establish a good credit history.

Another option to establish credit is by making regular, on-time payments on an installment loan, such as a student loan, auto loan, or personal loan.

It takes longer to rebuild a credit score after misusing your credit and making mistakes than it would to establish your score. So, make sure your actions lead you to improve your score, not decrease it. For example, missing just one payment may count against your score for up to two years.

Once you have established credit, a great tool for monitoring is to use You are entitled to one free credit report per 12-month period per federal regulations, and is the best tool to view your report for free. (Note, will provide the reporting information for free, but in order to view your score through their site, there is a small fee.)


Best of luck on your credit journey! As your credit union, we’re always here to help, whether that be with loans, credit cards, and other credit tools, or simply by offering advice.


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