Summary of this article
Credit score reflects behavior, impacts loans, approvals, and job opportunities.
Avoid missed payments, high utilisation, frequent applications, and reporting errors.
Steady, responsible habits over time build a strong credit score.
By Akshay Aedula, Product Growth, CRED
A credit score is both a mirror and a signal. It reflects past financial decisions and signals to banks and institutions how much risk you represent as a borrower. That signal can determine whether you get approved for a loan, the rent you want, or even a job offer, and on what terms.
The good news: it's fully within your control. A strong credit score isn't about shortcuts. It's about steady habits, built on financial responsibility, that compound into long-term trust.
What's a good credit score, and how can I achieve it?
700 is good, 750 is great. It tells lenders you pay on time and manage credit responsibly. That trust translates into higher limits, faster approvals, and better products. Since this is determined by behaviour, not income, you control the inputs to achieving a good score.
Pay on time: missed payments hurt the most.
Use less than you have: keep credit utilisation below 30% of your total limit.
Diversify: build a balanced credit mix over time.
Equally important: monitor regularly. Credit report errors are common and can drag your score down. Review your report, and if you spot inaccuracies, raise a dispute immediately. Lenders and bureaus are obligated to investigate and fix them at no cost.
How long does it take to build a good credit score from scratch?
From scratch, your first score usually appears after six months of activity. Reaching a strong score takes longer because time itself is a factor: lenders look for consistency across payment history, length of credit, and account variety.
If you start with deliberate usage - timely payments, controlled utilisation, and careful credit growth - you can see steady progress within a year. But lasting strength is built by repeating good habits, not rushing them.
What are the most common mistakes that can hurt my credit score, and how can I avoid them?
Most damage comes from preventable mistakes:
Missed payments: the single biggest negative factor.
High utilisation: maxing out credit signals distress.
Too many applications: frequent new credit requests look risky.
Ignoring errors: wrong information in your report can silently cut points.
The fixes are practical: set up auto-payments, keep balances low, space out applications, and review your credit report regularly.
Should I keep old credit cards open or close them, and how does this affect my credit score?
In most cases, it's better to keep old credit cards open. They add to your credit history length and help keep utilisation low. Even if you don't use them often, make a small purchase occasionally and pay it off to keep the account active.
However, there is an exception: if the card charges a high annual fee with little value or encourages overspending, closing it may make more sense. The key is weighing the impact on your score against the actual cost of keeping the card.
(Disclaimer: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
