Believe it or not, building a solid financial foundation does not start with a high credit score. Creating a budget, building an emergency fund, paying off debt and saving for the future should all be a priority over the Almighty FICO Score.

With that said, a higher credit score is still something you should strive for. With a higher credit score, you will enjoy greater savings and better terms on things like a mortgage, an auto loan, and in some cases auto insurance premiums.

A damaged credit score can also make it harder to rent an apartment and gain access to certain services. It could even keep you from securing certain jobs.

The Credit Score Breakdown

First, you need to understand what makes up the credit score.

There are five areas of the credit score and each one of them are weighted differently. The breakdown is as follows:

FICO Score. The score lenders use. Payment History: 35%. Amount of Debt: 30%. Length of Credit History: 15%. New Credit: 10%. Credit Mix: 10%.

Source: Experian.com

As you can see, 65% of your credit score is made up of your payment history and the amount of debt you have.

Therefore, we will first focus on these two areas of your credit score when it comes to creating the greatest impact when improving your score.

1. Look at Your Credit Report for Errors

Yes, believe it or not there are often errors on your credit report. In fact, a recent study by Consumer Reports found a third of Americans discovered errors on their credit reports.

Every American is entitled to one free copy of their credit report every 12 months. With three different credit reporting companies (Equifax, TransUnion and Experian), you can get all three credit reports at once or spread them out throughout the year.

Once you have your credit report in hand, go through and check for errors. Some things to keep an eye out for are debts you didn’t sign for, errors with a missed payment, or mistakes in the amount of outstanding debt.

If you find any errors in your credit reports, don’t hesitate to contact Equifax, TransUnion or Experian to dispute mistakes. You can do this online, by phone or through the mail. Check out each of their websites (Equifax, TransUnion or Experian). Correcting errors on your credit report is a simple and effective way to improve your credit score.

2. Don’t Miss Payments

Did you know a missed payment will stay on your credit report for up to seven years?

Now keep in mind, a missed payment is different from a late payment. Let’s assume your minimum payment is due on the 20th of the month and because you were busy doing twenty-seven other things, you forgot to make the payment on time. Therefore, your payment is late, and you may incur a late fee.

However, if you wait more than 30 days to get caught up on the late payment, then your payment is considered a missed payment and the missed payment will stay on your credit report for the next seven years.

The bottom line is, do everything you can to avoid a missed payment. Late payments may cost you a fee, but a missed payment will create a large dent in your credit score. Conversely, a pattern of on-time payments will improve your credit score over time.

3. Catch Up On Overdue Amounts

Now that you the importance of making payments on time, it’s time to start catching up on overdue payments.

This is always easier said than done, so let’s break it down to bite-size pieces.

The first step is to make a list of all payments that are overdue. Then list them in order of the most overdue to least overdue in terms of days late (30 days, 60 days, 90 days).

From there it’s time to start squeezing the budget and adding income to each month with a side hustle or part-time job. Start identifying the wants versus the needs in your monthly spending to decide what you may need to go without for the next few months while you get caught up.

Lastly, contact your creditors and see if they are willing to work out a payment plan with you. Determine how much you can pay each month towards each creditor and then contact them to set up a payment plan. Many creditors will work with you, but make sure you contact them with a plan of action instead of having them set one up for you.

4. Pay Down and Pay Off Revolving Balances

Beyond missed payments, the amount of debt you have on your credit report is the next largest factor affecting your credit score.

One way to boost your credit score is to lower your credit utilization ratio by focusing on the revolving credit.

Revolving Credit: These are credit cards, personal lines of credit and home equity lines of credit (HELOCs). Revolving credit is open ended, meaning there isn’t an end date. Unlike auto loans, home mortgages and other traditional loans, revolving credit can be accessed over and over again.

To determine your credit utilization ratio, add up the total revolving debt you have and divide that by the total available credit. For example, a revolving debt amount of $10,000 with a maximum credit limit of $20,000 equals a credit utilization ratio of 50%.

A good rule of thumb is to work on keeping your credit utilization below 30%.

Pro Tip: Pay down the balance before the statement closing date to help improve your credit score faster. Credit companies report the balance on the account at the statement closing date, not the payment due date.

5. Make Frequent Payments

Making multiple payments each month will not directly improve your credit score, but the results of multiple payments each month will.

The credit reporting agencies do not track the amount of payments you make towards your revolving debt. However, when making frequent payments, you’re more likely to avoid missed payments and lower your credit utilization ratio.

6. Ask for Higher Credit Limits

Another way to lower your credit utilization that increases your credit score is to contact your credit issuer and ask for an increase in credit limits.

Keep in mind, you must be in good standing with your credit issuer for this to work, and you will experience a hard pull inquiry on your credit report.

This will have an immediate effect of lowering your credit score, but soon your score will begin to increase with on-time payments and a lower credit utilization ratio.

7. Become an Authorized Signer

While this strategy won’t have a huge impact on improving your credit score, it does help those just starting to build their credit.

The key is to find someone with a very low credit utilization ratio and a long history of on-time payments. When the primary card holder adds you as an authorized signer, they are on the hook for any charges made by either of you, however you both will receive the benefits of good credit behavior.

The authorized signer also benefits by gaining the primary cardholder’s payment history to their own credit files.

Pro Tip: The authorized signer does not have to use or even possess the credit card. This is often a good practice, especially if the primary account holder and authorized signer are hesitant to mix money with family or friendships.

The Bottom Line

An improved credit score will gain you access to better rates and terms when it comes to borrowing money. However, it’s just as important to realize a good credit score does not necessarily have any indication on your financial wellness.

The only factors affecting your credit score have to do with borrowing money. Therefore, it’s fair to say someone who hasn’t borrowed money in over 7 years could have saved millions of dollars in the bank and still not have access to a loan based on their lack of credit.

With that said, always focus on creating and sticking to a budget. Create a habit of saving money each month, pay off your debt, and focus on a strong financial foundation before throwing all your efforts at the almighty credit score.

Chris “Peach” Petrie is the founder of Money Peach. Money Peach partnered with OneAZ to provide free financial education to members across the state. To learn more about OneAZ’s partnership with Money Peach, click here.