5 ways to build credit from scratch

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Have a good credit account. It determines whether you will be able to obtain a mortgage on a house, rent an apartment or buy a vehicle. By establishing your creditworthiness, you show lenders that you have good financial habits. Therefore, the better your credit, the more likely you are to be approved for a loan and get lower interest rates. Checking your credit score (opens in a new tab) is an easy way to see where your credit is.

Building credit takes time and effort, but it can be done. Whether you have no credit history or need to boost your low credit score, the following five tips will help you build your credit from the ground up.

About your specialist
About your specialist

Erin Bendig

Erin combines personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the financial aspect of credit cards, but has since branched out to cover other aspects of personal finance. Erin is well versed in traditional media with reporting, interviews and research, as well as using graphic design and video and audio storytelling to share with her readers.

Apply for a secure card

One of the most effective ways to increase your credit is to apply for a secured credit card. A secured credit card is similar to a traditional credit card, but differs in how you will receive your credit limit. With a secured card, you will be required to put down a security deposit which will determine your credit limit, usually 50% to 100% of the deposit. This way, lenders won’t have to take the risk of making you a cardholder, but you can still start building a credit history.

Once you have opened the card and made a deposit, you will be able to start making payments, and it will work effectively like a normal credit card. Over time, the more timely and regular payments you make, the better your credit history and overall score will be. Although secured cards don’t have the lending power of most credit cards, they are a good place to start. Secured cards can get your credit to a place good enough to switch to a traditional credit card. Some secure cards will also automatically upgrade you to an unsecured card after a period of good reputation.

One of the best secure cards to consider is the Discover It Secured card. Cardholders will earn 2% cash back at gas stations and restaurants (up to $1,000), plus 1% on everything else. It’s a great option for building credit, even offering cash back at the end of the first year.

Become an authorized user

Becoming an authorized user on an existing credit card account is another way to build your credit score from scratch. An authorized user is an additional person who can use someone else’s credit card. Adding an authorized user to your credit card can be risky though, so it’s important to be careful when using this option to build up credit.

Becoming an Authorized User on someone’s card means that the Authorized User’s activity will be reported to the credit bureaus. Credit card account details – credit limit, credit usage and payment history – will be displayed on the authorized user’s credit report (opens in a new tab), increasing their credit history. Not only will the authorized user benefit from this arrangement, but the original cardholder will also be able to benefit from it. All Rewards or Cash Back earned from an Authorized User will be aggregated to the Primary Cardholder’s account.

However, if credit is not managed wisely by the Primary Cardholder and Authorized User, it could negatively impact both credit scores. If the Authorized User irresponsibly exceeds their spending limit, the Primary User will end up with the bill. This can lead to missed payments, increased credit usage, and getting stuck on a high APR payment, which negatively impacts credit. On the other hand, if the primary cardholder is forgetful and often misses payments, it will have a negative impact on the authorized user’s credit history.

Open a store card

Typically, store cards require less credit history and lower credit scores for approval than more traditional credit cards, so if you’re looking for ways to boost your credit, you might want to consider following this way. Just make sure you don’t get carried away with your spending, as store cards usually have higher interest rates if you don’t pay off balances in full each month. To avoid impulse purchases, open a store credit card at a place where you often buy basic necessities, such as a grocery store. Make purchases with the credit card, then pay for them immediately. These one-time payments will begin to build your credit over time.

Report rent payments

Reporting your rent payments is another way to start building your credit. Although rent payments are generally not reflected on your credit report, Experian offers a service that will allow you to do so through the Experian RentBureau (opens in a new tab). Eligible tenants can have their payments reported through this service to increase their payment history. using Experian Boost (opens in a new tab) will also help you earn credit for one-time utility, streaming, and phone payments. Over time, as your on-time payment history increases, your credit score will improve.

Open a credit builder loan

Finally, another option for building credit is opening a credit building loan. This differs from most standard loans because you won’t have access to the money right away. Instead, it will be held in an account you’ll make payments to, and you won’t be able to access the money until the loan is paid off. Payments will be reported to at least one credit bureau, which will help you establish credit and show lenders that you are a responsible borrower.


Looking for more tips? Here’s how to get your credit score and five ways to improve your credit score if it’s too low. And, if you find yourself with a high balance, here’s how to pay off credit card debt and save money on interest payments.

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