You will need "Ringsels" to upgrade your attack and defence, these can normally be found in harder to reach area's within each level, mostly not accessible during your first visit.
For Attack Level 3 you only need 10 Ringsels.
You will be introduced to them quite early in the game by two characters who also help you to rise attack and defense.
There are 108 Ringsels in the game and you need 50 to upgrade attack or defense to level 5.
So unless you want to collect 100 it would be a good idea to not go over level 3 for both collect 35 Ringsels and then max one attribute reload your game and then max the other.
After being introduced to th characters you will find them in your inner world (Hold B and press Up).
The guy helps you raise defense and the women can raise your attack if you have the respective amount of Ringsels.
They switch locations as your inner world grows progressing the game but are normally easy to find as it is quite small.
They will also often mention when saving that you collected enough to raise an attribute.