When I was 19, my understanding of credit was murky at best. My first experience was applying for two types of credit: a store card at a local jewelry shop, which I was approved for, and an auto loan for a new car, which I was denied. That denial stung, especially because I thought I met the requirements: full-time employment, a decent wage, and no dependents. In my mind, I was responsible enough to qualify.

That moment left me feeling that credit was some invisible boogeyman, preventing me from accessing the things I wanted. It wasn’t until much later that I realized my perception was flawed. Credit, in reality, is a reflection of your ability to manage and repay your debts consistently. At 19, I wasn’t disciplined in this area, and, unfortunately, essential conversations about finances and credit management were not part of my upbringing.

Unpacking Credit Scores

A credit score is not a mystical number; it’s a three-digit snapshot of your financial behavior. Lenders use it to assess the risk of lending to you. It’s primarily determined by factors such as:

• Payment History (35%)
  • Do you pay your bills on time? Late or missed payments have a significant negative impact.
• Credit Utilization (30%)
  • How much of your available credit are you using? Ideally, this should stay below 30% of your credit limit.
• Length of Credit History (15%)
  • How long have you had active credit accounts? A longer history works in your favor.
• Credit Mix (10%)
  • Do you have a variety of credit types (e.g., loans, credit cards)? A diverse mix can show responsibility.
• New Credit (10%)
  • Have you opened several new accounts recently? Frequent credit inquiries can lower your score temporarily.

Early Financial Missteps

As a young adult, I struggled with paying my bills consistently. Whether it was due to a lack of education on financial management or simply poor habits, I found myself stuck in a cycle of late payments and missed opportunities.

My mid-20s brought more clarity, but not without plenty of trial and error. Like many, I thought a good credit score was an impossible mountain to climb, so I avoided it altogether. This approach only exacerbated the problem.

A Shift in Perspective

The turning point came when I worked at a regional bank. It was here that I realized credit isn’t a burden or a chore—it’s a lifestyle. Every decision I made regarding my bills and spending had consequences.

I adopted a mindset where paying my bills on time became non-negotiable. It wasn’t easy, especially when living paycheck-to-paycheck without an emergency fund. However, I stopped viewing timely payments as a sacrifice and started seeing them as a cornerstone of my financial routine.

Building the Foundation

If you’re feeling overwhelmed by your credit score or unsure where to begin, start with these steps:

• Review Your Credit Report
  • Obtain your free annual credit report from all three bureaus (Equifax, Experian, TransUnion). Look for errors or inaccuracies and dispute them promptly.
• Make Timely Payments
  • Set up reminders or automatic payments to avoid missing due dates. Consistency is key.
• Lower Your Credit Utilization
  • Pay down credit card balances and keep spending within 30% of your limit.
• Avoid Opening Multiple Accounts
  • Be cautious about applying for new credit frequently; too many inquiries can hurt your score.
• Practice Patience
  • Building good credit takes time, but small, consistent actions will lead to progress.

In Part 2, we’ll explore maintaining good credit as a lifestyle and how disciplined financial habits can lead to long-term rewards.