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How to build credit from scratch, step by step
Having no credit is not the same as bad credit, but it can cost almost as much. Here is how to start a credit history the safe way.
Landlords, lenders and sometimes employers look at your credit. With no history, they have nothing to look at, and that often means a "no" or a higher price.
What builds a credit history
Your history is built from accounts reported to the three credit bureaus. The CFPB guide to credit reports and scores explains that payment history and how much of your available credit you use are among the most important factors.
Four ways to start
- Secured credit card: you put down a deposit, often a few hundred dollars, and get a card with that limit. Use it for a small bill and pay in full every month.
- Credit-builder loan: offered by many credit unions and community banks. The money is held in an account while you make payments, and you get it at the end.
- Authorized user: a family member with good habits adds you to their card.
- Student or starter card with a low limit, if you qualify.
Before applying, confirm that the product reports to all three bureaus. If it does not, it will not build your history.
The habits that actually move the score
- Pay every bill on time. Set autopay for at least the minimum.
- Keep balances low: using a small part of your limit looks better than maxing it out.
- Do not close your first card later; its age helps your history.
- Apply for new credit only when you need it.
Check your progress
Get your free reports at AnnualCreditReport.com and make sure the new accounts show up correctly. The FTC explains your free report rights.
Frequently asked questions
How long does it take to get a credit score?
Generally a few months of reported activity. Scoring models need at least one account reported to the bureaus for a period of time before they can generate a score.
What is a secured credit card?
A card backed by a cash deposit, which usually becomes your credit limit. It works like a regular card and, if the issuer reports to the bureaus, builds history.
Does being an authorized user help?
It can, if the card issuer reports authorized users and the main cardholder pays on time and keeps balances low.
Should I open several cards at once?
No. Each application can mean a hard inquiry, and new accounts lower your average account age. Start with one and use it well.
Once you start building credit, protect it from identity theft.