How to Build a Good Credit Score Fast

Building a good credit score can be tricky. Here's how you can get started on the right foot.

7 min read

At N26, we aim to empower you to live and bank your way – removing the barriers of traditional banking, so you can enjoy a fast, flexible, and transparent experience. We believe in banking that supports you in developing strong financial wellness habits, and an important part of that is building a good credit score.

If you are just beginning your credit journey, this article will arm you with the tips you’ll need to build good credit from the start. If you are looking for ways to rebuild your existing credit score, we’ll be covering that on our blog later this month, so stay tuned.

What is a credit score?

A credit score is a number that is given to you based on your credit history – that is, how consistently you pay off credit on time, how much debt you have in relation to available credit, and how many accounts you have open. The higher your credit score is, the better positioned you might be to make a large purchase or to be approved for a loan. Credit scores are used to determine how likely you are to pay off any loans you might owe in the future.

When it comes to credit scores, you may be familiar with names like “FICO” or “Vantage.” These are some of the most popular credit scoring systems in the U.S. today.

What determines your credit score?

Your credit score is influenced by several factors. Some of the main ones are:

Your payment history — Making payments on time consistently is the biggest factor that affects your credit score. Being late on a payment one time isn’t necessarily a big deal, and won’t usually impact your credit score. What will impact your credit score is regularly being late on payments. Another factor in this is how many days late you are on your payment. If you are consistently late paying your bills, and are also not paying the bills within 30 days of the due date, your credit score will be impacted. If you miss a payment but are still in the first 30 day window of the bill being due, as long as you can get the bill paid before 30 days are up, your credit score is likely not going to be impacted.

Your credit utilization rate — Credit utilization is basically how much of your available credit you are using at any given time. If you have a card with a spending limit of $1,000, and you’ve spent $500 on that card this month, you have used 50% of your credit. The lower this number is, the better for your credit score. Credit utilization rate is the second biggest factor that determines your credit score, so keeping an eye on your account balance each month and making sure you aren’t getting too close to your total credit limit is very important. It is often recommended that you should only be using 30% or less of your available credit.

Your credit age — Credit refers to how long your accounts have been open. The older they are, the better it is for your credit score. A person who has a credit card for one year, for example, won’t receive as big of a boost to their credit score as a person who has had a credit card for 35 years. This is also why it’s important that people who have had a credit card for many years avoid closing that card, because doing so can hurt their credit age, and negatively impact their credit score.

Credit inquiries — To maintain a good credit score, you want to limit the number of hard credit inquiries you have. A credit inquiry is a request to look at your credit report. This request can be made by you or by an external party, such as creditors, lenders, and employers. There are 2 kinds — soft and hard credit inquiries.

Soft credit inquiries do not impact your credit score. Some examples of soft inquiries:

  • When you are requesting to see your personal credit report.

  • When you receive a letter in the mail letting you know you’ve been pre-approved for a credit card.

  • When an employer is considering hiring you, that company may review your credit report. These requests can happen without you even knowing.

Hard credit inquiries are what impacts your credit score. Some examples of hard inquiries:

  • When you are applying for a new credit card.

  • When you are applying for a car or mortgage loan.

  • When you are applying for a student loan.

So while hard inquiries may impact your credit score, they are often necessary, but should be used sparingly.

Why is having a good credit score important?

Having a good credit score can affect your ability to make significant purchases you might be planning for in the future. That includes buying a house, renting an apartment or buying a car. Your credit score can even factor into employment and job opportunities. In some cases, employers will run credit checks on potential candidates before making the candidate an offer. There are many more examples, but all this to say – your credit score can be very important.

What is a good credit score?

Based on the 300-850 range scale that both FICO and VantageScore use, scores in the range of 673 – 695 or higher are considered good. The average credit score for most people (as of late 2019 data) was a 706 FICO score and a 682 VantageScore. See more credit score stats from NerdWallet.

What is an excellent credit score?

On FICO and VantageScore scales, credit scores in the range of 720 – 800 or higher are typically considered excellent.

How can you check your credit score?

There are free services available for checking your credit score, such as Mint and similar apps, as well as many credit card companies that offer this service.

How to get started on your credit journey:

New to building your credit score? Apply the following best practices to build good credit from the start.

Use debit for everyday purchases. It’s easy to get caught up in swiping your credit card without thinking about how much debt you’ve racked up. Using a debit card for everyday purchases and saving credit lines for bigger splurges or emergency purchases will help you avoid sticky situations that could harm your financial well-being.

Pay your bills on time. On-time payments are weighed heavily when it comes to having a good credit score, so make sure you’re paying your monthly bills and credit card statements on time. Setting up automatic payments for any of your recurring bills is an easy way to make sure you don’t fall behind.

Watch out for high interest rates. Before you apply for a new card, be sure to evaluate whether or not it’s a good opportunity. According to WalletHub’s Credit Card Landscape Report, the average credit card interest rate is 19.02% for new offers and 15.10% for existing accounts.

Don’t exceed your credit card limits. In fact, you should avoid spending anywhere near your credit card limit whenever possible. Obviously, there will be exceptions, like emergencies when you need to break this rule of thumb. But outside of extraordinary circumstances, it is recommended to spend 30% of your limit or less to keep you from hurting your credit score.

Don’t apply for too many lines of credit in a short period of time. Yes, having multiple accounts can help lower your credit utilization. However, multiple applications within a short period of time will negatively impact your credit score.

If possible, don’t close your old accounts. Even if you don’t plan on using an existing account any longer, it is best to keep it open as it helps lower your credit utilization and improves your average age of credit. That being said, you probably do not want to keep an account which requires an annual fee, such as a rewards credit card, open if you don’t plan on using it anymore.


Ready to take your financial well-being into your own hands? Open an N26 account today in 5 minutes directly from your smartphone and receive a debit card and checking account that complements your on-the-go lifestyle.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

By N26

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