Building Credit

Building your credit can be tricky. It’s a long process that takes good habits and smart financial decisions. If you don’t have a credit history it will be very hard to secure a loan, get a credit card, or it could even stop you from getting an apartment.


The traditional credit-building methods of opening an account, maintaining lower balances, and making payments are still the core fundamentals in getting a good rating and building credit. Even though the ways of the past are still prevalent, there are alternative ways to build credit and the credit bureaus are using alternative data, like your phone bill payment, as ways to supplement your credit reports.

Ways to Build Credit

Even though there are new ways to build credit, the traditional ways are still the best and fastest. Even if you’re approved for a credit card or a loan you need to use credit responsibly.


Being responsible with credit means you typically:

  • maintain lower balances
  • have no missed payments
  • have no impulse credit decisions

Building Credit with a Credit Card

A credit card is one of the fastest ways to build credit and is the easiest way, once you have credit, to diversify your credit background. In order to take advantage of a credit card you should pay on time and in full. You’ll want to keep your balance minimal as most credit cards, even with good credit, come with high interest rates.


Types of credit cards:

  • secured credit card
  • starter credit cards
  • retail credit cards
  • student credit cards

Establishing credit with a credit card is great because it hits on all the key areas for credit score calculation: payment history, credit utilization, length of credit history, new credit, and credit mix.

Being an Authorized User

In many cases, it’s hard for someone who has no credit to get a credit card. The best way to establish credit if you have no credit is to become an authorized user on someone else’s credit card or open up a joint account with someone who has a good history.


We often urge parents to consider helping their children with little or no credit history by adding them as authorized users on their own credit cards. You’ll have to review the requirements for each of your accounts but most allow authorized users starting at the age of 13. By doing this, a parent can set their child up for financial security, and freedom, before they even graduate high school.

Building Credit without a Credit Card

A credit card is the conventional way most people start building credit but it’s not always the best way for you or how many start out. A credit card is a lower risk route to take when it comes to building credit for the first-time.


If a credit card isn’t in your wheelhouse or you keep getting denied, there are alternatives and the easiest way is to look at your current position in life. You’ll most likely run into:

  • student loans
  • credit-builder loans
  • auto loans
  • peer-to-peer lending
  • cosigning on a loan
  • utilities, rent, and other bills

Tips on How to Establish Credit with No Credit History

If you’re just starting out, it’s rather difficult to find someone to lend to you. There are some ways to start out on the right foot. Here are some tips on how to break the ice with your credit:

  1. Talk to your bank you currently have a checking account or savings account with and see what they’d offer you.
  2. Find a few secured credit cards and identify which ones fit your current financial situation.
  3. Instead of going for a major credit card brand, try store credit cards.
  4. Ask your parents, friend, or other family member if they’d be willing to cosign or add you as an authorized user.

How to Build Credit Fast

It takes awhile to get an exceptional score and there is no quick way to getting a perfect score. Your first goal should be to break into the world of credit and the easiest way to do that is by getting a secured credit card or get a credit-builder loan. The “fast” method still takes around 3-6 months before you’ll see any results due to the nature of the various scoring models only reporting against accounts that have been around for more than a few months. For example, FICO only reports against accounts that are six months or older.


A few tips to keep in mind when trying to build credit fast:

  • Set a budget and stay within it.
  • Make sure you pay all of your bills, on-time.
  • Take advantage of the 10% rule and only use 10% of your approved credit limits.
  • Don’t open more than one credit card at a time and spread out your applications over a period of time.
  • Always have liquid cash, like an emergency fund, on-hand for life events.
  • Have patience with your credit and practice good financial habits.