How to Build Credit from Scratch

If you’re starting with no credit history, building credit can feel like a catch-22: you need credit to get credit. Fortunately, there are practical ways to establish a solid credit foundation.

Step 1: Get a Secured Credit Card

Secured credit cards are designed for people with little or no credit. You provide a cash deposit (e.g., $200), which becomes your credit limit. Use the card for small purchases and pay it off in full each month to avoid interest.

Step 2: Become an Authorized User

Ask a trusted friend or family member with good credit to add you as an authorized user on their credit card. Their positive payment history can boost your credit, even if you don’t use the card.

Step 3: Apply for a Credit-Builder Loan

Credit-builder loans, offered by some banks and credit unions, hold the loan amount in an account while you make monthly payments. Once the loan is paid off, you receive the funds, and your payment history is reported to credit bureaus.

Step 4: Pay All Bills on Time

While not all bills (like utilities) are reported to credit bureaus, some services, like Experian Boost, allow you to add on-time payments for utilities, rent, or streaming services to your credit file.

Step 5: Monitor Your Progress

Use free tools like Credit Sesame to track your score. After 6-12 months of consistent payments, you may qualify for an unsecured credit card or a small loan.

Key Tips

• Keep credit utilization below 30%.

• Avoid applying for multiple accounts at once to minimize hard inquiries.

• Be patient—building credit takes time, but it’s worth the effort.

With these steps, you can go from no credit to a healthy score, unlocking better financial opportunities.