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How to Build Credit History and Improve Your Credit Score

close up of a wallet to symbolize building credit history and improving credit score

Did you know building credit history and maintaining a good credit score should be an essential element of your financial planning and maintenance? Below, we discuss steps to achieve this.

Author: Martin Lundgren

As you evaluate your financial standings, one helpful area to focus on can be building your credit history and improving your credit score. Maintaining a high credit score is a key component of a robust financial portfolio. A strong credit history opens doors to favorable financing options and investment opportunities, even for those with substantial assets. 

Here are some pointers to help build your credit history and sustain a good credit score.

The Importance of Timely Payments

First, you want to make sure you pay your credit cards on time, as this will help you improve your credit score. For high-net-worth individuals, maintaining a flawless payment history is non-negotiable. Even a single late payment can significantly impact your credit score and stain an otherwise stellar credit report. Also, did you know a late payment can make your interest rate go up?

2 Strategies for Ensuring Timely Payments

  • Automate payments where you can. Utilize automatic payment features to ensure that your credit card bills are always paid on time. This minimizes the risk of oversight.
  • Adopt an early payment strategy. Whenever possible, pay off your credit card bill as soon as it arrives. This not only helps in managing cash flow but also keeps your utilization ratio low.

Avoid Carrying a Balance and Improve Your Credit Score

If you want to build credit and improve your credit score, did you know there are benefits of zero balance? If you typically have the means to pay off your credit card balances in full each month, do so! It is advantageous for several reasons. Carrying a balance incurs unnecessary interest and charges, not to mention affects your credit utilization ratio.

3 Techniques to Maintain Zero Balance

  • Make a full payment each cycle. Make it a point to clear your credit card balance in full each month. This prevents interest accumulation and maintains a low utilization rate.
  • Make frequent payments. Consider making multiple payments throughout the billing cycle. This approach keeps your balance low and can enhance your credit utilization score.
  • Try expense tracking. Use financial software or services to monitor your spending in real time and ensure that you stay within your budget.

Request Higher Limits Regularly to Build Credit

Did you know you can request a higher credit limit once every six months? A higher credit limit can significantly improve your credit utilization ratio, an essential factor in your credit score. For many, this is an opportunity to leverage existing financial relationships for better credit terms.

Managing Credit Utilization

As you build and improve your credit, It can be helpful to understand credit utilization. 

The credit utilization ratio measures the percentage of available credit that is used. Keeping this ratio low is crucial for maintaining an excellent credit score. Ideally, high-earning clients should aim for a utilization rate below 1%.

As far as best practices for utilization, keep your credit card balances as low as possible. Even with high spending, prompt payments ensure that your utilization remains minimal. Also, try to distribute your expenditures across multiple cards to avoid high balances on any single account. You should also regularly review your credit utilization using sophisticated financial tools or services. And finally, real-time monitoring can help you maintain optimal utilization rates.

Additional Strategies for High-Net-Worth Individuals

You can build your credit and improve your score in a few other ways:

  • Be selective about what accounts you open. Only open new credit accounts when necessary. Each application can result in a hard inquiry, which might slightly lower your score.
  • Maintain long-standing accounts. The length of your credit history affects your credit score. Keeping older accounts open and active benefits your credit profile.
  • Aim for a diverse credit mix. A mix of credit types (credit cards, mortgages, auto loans) demonstrates financial versatility and can positively impact your credit score.

Taking a Step in the Right Direction

As financial advisors, we can attest that a strong credit history is a pillar of financial strength. By adhering to disciplined payment schedules, avoiding balances, strategically increasing credit limits, and managing credit utilization meticulously, you can maintain, build, and enhance your credit score. 

Work with your financial advisor for more strategies that can help improve your long game. Our team is always available if you have questions; simply reach out today.


Northern Lights Advisors is a fiduciary, fee-only, Registered Investment Advisor (RIA) firm based in Seattle, Washington. The information in this article is not intended as tax, accounting, or legal advice. Read the full disclaimer here.