Building a Credit Score, Things You Wish Your Parents Had Done

I’m currently being trained as a financial counselor at Utah Valley University’s Money Management Resource Center (MMRC). It’s a group designed to help students, teachers, and (soon) the rest of the community to understand and act on their financial situation. During tax season we volunteer to help with taxes. Outside of that we help educate on credit scores, surviving debt, student loans, budgeting, and prioritizing of debt/dealing with creditors.

They Key To Your Child’s Heart

In training, a friend of mine and I did a presentation about credit history. I was shocked when he shared during the practice demonstration that his credit score was over 800! That’s nearly a perfect score!

How had he done it? Simple. His parents had put a credit card in his name when he was a teen, and had paid for gas with it. They always paid it on time, and he used it for gas during high school. Eventually, of course, the son had a FANTASTIC credit score. He can buy a house at a lower interest rate, get an apartment easier, obtain lower auto loan interest rates, and, very importantly, receive cheaper auto insurance! Remember, building a credit history takes time.

The point is, you can help your child 10 years from now by putting a bill in their name and opening a bank account in their name. Just make sure the account is reported in their credit history.

Okay, so maybe it isn’t a key to their heart, but they sure will thank you later.

Parts of Your Credit Score

35% of your credit score is based on your payment history. Are you paying on time? If you aren’t, this is going to drop your score very quickly.

30% is the amount that you owe compared to your limit. Try to owe less than 25% of your maximum allotment. Basically this means that if your credit card max is $2000, then you should never have a balance greater than $500. But let’s be honest, you should just pay of ALL balances instantly when using credit cards. Use it, pay it off same day. This makes it a tool, and not a noose.

15% is the length of your history. This is where my friend had an advantage. Even though it;s only 15% of your score, it’s significant when I have 3 open accounts and each is 1-3 months old, as compared to my friend’s, who has 10+ years of history on one account, so they all seem longer. This has 2 parts, You want one account to be at least 10 years old, and the 2nd part is the average age of all credit accounts you have, which should stay above 3 years.

10% is new credit. Basically, don’t open a bunch of new accounts over a short time. Try to shop for cars or housing rates in a small time frame (about 45 days), because your credit score drops 5 points for every inquiry and stays there for 24 months.

The last 10% is the mix of credit you have. It’s good to have a mortgage, some sort of installment loan (personal, student, or auto loan), and then some credit cards (revolving credit). If most of your credit mix is in credit cards, that can be damaging to this part of your score. 

Now that you know a few basics, you can improve your credit score up to a perfect 850! or at least above 750 (which is the highest tier of credit scores) and help future generations to do so also.

What have your parents helped you to achieve financially? Share you story in the comment below!
-Jacob Johnson
Personal Financial Planning student at Utah Valley University
He enjoys ballroom dance, eating authentic mexican tacos, and  counseling fellow UVU students in the Money Management Resource Center on their student loans, and budgeting. He strives to become a Certified Financial Planner designee to help people capture and live their ideal life.


Thanks for editing my writing and helping it to look great Briana! If you need an editor, this is the lady for the job.

-Briana Beers graduated from BYU with a degree in English and editing. She’s currently a stay-at-home mom who moonlights as an editor in her rare spare time. When she’s not chasing her kids or cleaning three week old food splatters off the light switches, she enjoys reading, baking, and spending time with loved ones.


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