6 Achievable Ways to Build a Good Credit Score in Your 20s and 30s

Building a good credit score should be a priority for every young adult. Your credit score reflects your financial reputation and reliability, and when managed well, it can open doors to achieving significant financial milestones.

Financial institutions are looking at your credit behavior when assessing loan applications. A good credit score can improve your chances of approval and even secure you better loan terms. On the flip side, a less desirable or nonexistent credit history can make it more difficult to get approved, even if you have the income to support a loan. Thankfully, you don’t need to be wealthy or have decades of financial experience to build a solid score. 

Even if you’re just starting out in your career or looking to improve your credit habits, there are practical and achievable ways to boost your credit profile. Below are tips designed to help you build a good credit score in your 20s and 30s:

1. Start with the Right Financial Mindset

Before securing a credit card in the Philippines or taking out a loan, it is essential to develop a healthy relationship with money, and that begins with your mindset. Instead of seeing credit as “extra money” or a quick way to afford lifestyle upgrades, consider it as a means to support your long-term goals. Also, take note that misusing credit can hurt your financial reputation and make it harder to access funding when you really need it.

To cultivate a responsible financial mindset, prioritize living within your means and budgeting for needs before wants. Understand that credit is for planned, necessary expenses, not impulse buys. This approach naturally fosters caution in credit use, laying the groundwork for a positive credit history and stronger financial habits.

2. Apply for a Credit Card That Matches Your Lifestyle

One of the most accessible ways to start building credit is by securing a credit card, especially one suited to your lifestyle and spending behavior. If you’re a first-time user, consider a starter card from a trusted local bank that offers manageable credit limits and no annual fees. Some cards are designed specifically for young professionals, offering perks like rebates on groceries, fuel, or online transactions.

Having a card that aligns with your regular expenses helps stretch your budget and encourages a strong repayment history, positively impacting your credit score.

3. Avoid Delays in Bills Payment 

Another crucial factor in building a good credit score is your payment history. Lenders and credit bureaus primarily assess your on-time payment history. This includes credit card payments, utility bills, mobile phone plans, and personal loans. Late or missed payments, even by just a few days, can negatively impact your score and possibly result in penalties or service disconnections.

To stay on top of your bills, it helps to set up calendar reminders. You can also arrange for auto-debit setups with your provider.

4. Use Only a Small Portion of Your Available Credit

It’s also important to manage your credit utilization ratio, which refers to how much of your available credit you’re using. A general rule of thumb is to keep your usage below 30 percent of your credit limit. If your credit card limit is PHP 20,000, try not to spend more than PHP 6,000 at any given time.

Keeping your credit utilization low demonstrates to lenders that you’re not overly reliant on borrowed money, thereby boosting your creditworthiness. For larger purchases, distribute the spending across multiple billing cycles or make early partial payments to reduce your balance. Consistent on-time payments may also qualify you for a credit limit increase, further improving your utilization ratio. Just be sure not to increase your spending to match.

5. Prioritize Paying Off High-Interest Debts

For existing debts, particularly high-interest ones such as payday loans or some buy-now-pay-later plans, prioritize their repayment. High-interest debts can quickly accumulate and become difficult to manage, especially when the monthly interest accrues, diminishing your payments and prolonging your repayment timeline. You may also explore consolidating your debts through personal loans from reputable banks that offer lower interest rates and fixed monthly payments.

Whatever strategy you choose, tackling high-interest debt early helps free up your income and improves your ability to use credit responsibly moving forward.

6. Don’t Close Old Accounts Without Good Reason

You might also be tempted to close a credit card you no longer use, especially if you’ve moved on to a card with better perks or a higher limit. Closing old credit accounts can negatively impact your score by shortening your credit history, a factor lenders consider. Therefore, keeping older accounts open, especially those in good standing, can be advantageous.

If the old card doesn’t have an annual fee, consider using it occasionally for small, recurring expenses like your online streaming subscription or mobile data top-ups. This keeps the account active and contributes positively to your credit history without encouraging overspending.

A good credit score in your 20s or 30s is achievable, regardless of income or extensive experience. It simply requires consistent, mindful financial habits and understanding how credit works. Remember, it’s never too late to take control of your credit. The small, responsible choices you make today can lead to greater financial freedom and better opportunities tomorrow.