How to Build Credit and Understand Your Credit Score

If you’re new to credit—or just trying to understand how credit scores work—you’re not alone. Credit can feel confusing at first, but with the right knowledge and healthy financial habits, you can start building credit with confidence.

At Embold Credit Union, we believe credit should empower you—not hold you back. Here’s what you need to know about how credit works and how to build credit from scratch.

What Is Credit?

Credit is essentially trust. When you borrow money—through a loan, credit card, or line of credit—you’re promising to pay it back. Lenders use your credit history to decide how much trust you’ve earned.

Your credit score is a three-digit number (typically between 300–850) that shows how likely you are to repay what you borrow. The higher your score, the more opportunities open up—like better loan rates, higher credit limits, and easier approvals.

It’s also important to know that not all credit scores are the same. Different lenders may use different scoring models, such as FICO® or VantageScore®, and each model may weigh factors slightly differently. When you check your score, make sure you know which model you’re looking at so you can compare apples to apples.

What Makes Up Your Credit Score?

• Payment History (35%) – Paying on time is the single most important factor.
• Credit Utilization (30%) – How much of your available credit you’re using compared to your limit.
• Length of Credit History (15%) – The longer you’ve had accounts, the better.
• Credit Mix (10%) – Having different types of accounts (credit card, loan, line of credit) helps.
• New Credit (10%) – Too many new applications at once can hurt your score.

How to Start Building Credit

Whether you’re just getting started or rebuilding, these steps can help you build credit the smart way:

1. Open a Starter Account. A small credit card or loan is a safe first step. At Embold, we have some great Personal Loan or Personal Line of Credit options. We’ll always make sure you can afford your payment and know your due date. Our Personal Loans are designed to help you establish and grow your credit.
2. Always Pay on Time. Even one late payment can lower your score. Set up autopay if possible.
3. Keep Balances Low. Aim to use less than 30% of your available credit.
4. Be Selective About New Accounts. Too many applications at once can temporarily drop your score.
5. Check Your Credit Reports. You’re entitled to a free report every week thanks to some new policies from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Check it out on www.AnnualCreditReport.com.

Why Building Credit Matters

Strong credit can unlock lower interest rates, make it easier to buy a car or home, help with renting an apartment, and even boost job opportunities in certain careers.

Most importantly, a good credit score gives you financial freedom and peace of mind.

Let’s Build Boldly Together

Credit is a journey, and you don’t have to go it alone. From financial counseling to credit-building products, Embold is here to support you at every step.

Ready to start building your credit today? Explore your options with an Embold Personal Loan, Line of Credit, or Credit Card.

We also have great workshops that are free to anyone, and meant to give you the tools and skills you need to achieve your financial goals. Click here to check out our upcoming classes.