1. Know Thy Credit Score
First step to building your credit score is know what your credit score is. To do this free of charge you can go to Annual Credit Report. You might not have heard of this site because it is not advertised on TV. This is because the sites with TV commericals and other ads all try to entice customers with hidden fees or gimmicky services, Annual Credit Report on the other hand offers you the chance to get all three of your credit reports free once a year with no gimmicks. While you can get your credit report for free, you do have to pay an additional fee to get your credit score (that three digit number that shows your credit worthiness.
2. Have Credit
This may sound self explanatory, but you would be surprised how many people believe that just paying their bills on time and not having any credit cards is the best way to have good credit. Actually the credit agencies want to see that you have credit available to you. That makes it more likely that you will pay off your debts and have alternate sources of funding in bad times. The more credit available to you, the merrier your credit score.
3.Have Credit for a Long Time
Not only is it best to have credit available to you to enhance your credit score, it is also better to not close that credit. If you have the option say to close your current $5,000 credit card and open a new card for $10,000 or keep your current card and add a second $5,000 limit, it is almost always in your interest to choose the latter. Credit agencies reward you for having a continuing credit history, rather than opening an closing credit accounts.
4.Don't Fully Utilize Your Credit
As contrary as it may sound, it is better to keep your credit cards under utilized. In fact it is suggested to keep your balances at 10-20% of your limit if possible. This shows the credit agencies that your not struggling to make ends meet and have access to additional funding if necessary. Your credit score drops as your credit limits get more fully utilized.
5.Use Multiple Funding Sources
Credit score company's also favor individual's who are able to juggle multiple sources of funding, this shows that the individual is fairly sophisticated in their understanding of personal finances. Therefore it is suggested that you at least have a checking account, savings account, credit card, and some type of loan (mortgage, car, personal, etc.).
So those are 5 ways to easily build your credit score. But remember while paying your bills on time doesn't necessarily help your credit score, not paying them on time will hurt your score.