The Best Ways to Build Your Credit

There are many Americans with no credit experience—especially among younger populations. And though it may seem difficult, it is possible to build a credit score with no credit history.

Are you looking to build your credit?

From buying a new cell phone to applying for a mortgage, credit reports are used by businesses to evaluate your creditworthiness and establish your borrowing terms. Credit scores are based on how you’ve managed debt in the past, and lenders use your score to establish the level of risk involved.

If you have a long history of making on-time payments and managing debt responsibly, you likely have a good credit score and may have a better chance of getting approved with favorable credit terms. If you don’t have much experience with credit or have negative information such as late payments in your credit history, you may have difficulty being approved for a new account. If you do get approved, you’ll likely get less favorable terms.

How to Build Credit With a Credit Card

If you want to build your credit using a credit card, it’s important to remember that the way you use it will determine your score. Signing up for a credit card only to max out your balance and miss payments will leave you worse off than before. Make sure that you make on time payments on your debts. The goal is to build up enough credit to acquire some of the best credit cards available.

4 ways for responsibly building good credit using a credit card:

  1. Open your first credit card account. Which card you apply for should be based on whether you have any credit history. There are credit cards for fair credit, bad credit, good credit, and no credit. If you have at least some credit history, you should consider applying for a beginner card (such as a store card) that’s easier to get approved. If you have no credit history, you most likely need to apply for a secured credit card in order to be approved. When you have your first card, use it to make small purchases that you can easily afford. Pay your balance in full each month to start building a history of on-time payments, showing lenders that you’re a responsible borrower.

  2. Get a secured credit card. If you have no credit or poor credit, your options will be limited. However, you may still be able to qualify for a secured credit card. This type of card works like a traditional credit card, except that it requires you pay a security deposit, which the issuer then holds as collateral against what you spend. If you were to stop making payments and default, the issuer keeps the deposit to cover the debt. This protects credit card issuers financially and means they’re able to approve people with a poor credit history. Once you get a secured card, use it to pay for small everyday items and pay your bill on time and in full each month. Over time this will add to your payment history, which can help build your credit score.

  3. Become an authorized user. For people who have trouble qualifying for a credit card on their own, becoming an authorized user could be a solution. As an authorized user, you’ll be added to an existing account and be given your own card to use. The account’s positive payment history is then added to your credit report and factored into your credit scores. However, since you’re not responsible for managing the account and making payments, the degree to which it can help your score is limited.

  4. Request a credit limit increase. Use your card and pay your bill in full and on time each month. Then, after you’ve had the card for several months, consider requesting a credit limit increase. Doing so could help improve your credit utilization ratio – the ratio of your balances to your credit limits. Your credit utilization is an important credit scoring factor, and keeping your balances under 30% of your credit limit can help your scores. And while 30% is a great starting point, the lower your credit utilization, the better it is for your score. Lenders may not approve requests from accounts with large outstanding balances, so it’s best to pay down as much of your debt as possible before requesting an increase or applying for new credit. If you are approved for a limit increase, don’t ramp up your credit card spending.

How to Build Credit Without a Credit Card

Any accounts you have that are reported to credit bureaus in good standing have the potential to help boost your score.

Here are four strategies for building credit without a credit card:

Pay all your existing loans on time. Payment history is the most important aspect of your credit score, so pay close attention to your existing debt. Make sure to submit all your payments in full and on time to maintain a good payment history. Another factor in your scores is the progress you’ve made on paying down your loans. Getting a balance closer to zero indicates to lenders that you’re able to repay your debts.

Installment loans can give your scores a lift. If you don’t have a long credit history, an installment loan, which you pay back through set monthly payments, could help you build your score. Auto, mortgage, personal and student loans are types of installment credit. That means the loan you might borrow to buy a car or pay for your education has the added benefit of helping you build credit, assuming you make all your payments on time.

Nonprofit lending circles. A lending circle is an organized group of peers that lend to each other. Through this process, communities help each other build credit. The Mission Asset Fund is an example of a popular nonprofit that facilitates this type of borrowing.

Have your monthly bills added to your credit report. While you may have a long history of paying bills on time, things like your cell phone and utility bills won’t help you build your credit score. You can request to have these bills added to your credit report by using Experian Boost®ø. It works by allowing Experian to connect to your bank account and add on-time payments for utility, phone and other bills to your credit report so they can be reflected in your FICO® Score☉  powered by Experian instantly. You can also have your monthly rent payments reported to Experian by using Experian RentBureau.


How to Establish Credit When You Have No Credit History

There are many Americans with no credit experience—especially among younger populations. And though it may seem difficult, it is possible to build a credit score with no credit history. Consider the following methods for building credit from scratch.


Establishing Good Credit

Ask someone with established and good credit to help you get a loan or to add you as an authorized user to one of their existing credit card accounts. Doing this will allow you to have your first account listed in your credit report, allowing you to build a positive payment history. Over time, your payment history and experience with this account will help you build a score of your own.


Look for loans that are designed for people with no credit history. Credit-builder loans can help you start building credit. You can get one of these loans from a community bank or credit union. Before applying for a loan with the intention of building credit, always confirm that the lender will report your account and payment history to one or more of the three main credit bureaus (Experian, TransUnion and Equifax).


Use Experian Go™ to create an Experian credit report. With Experian Go, you can sign up for an Experian membership and create a credit report, even if you don’t have any credit accounts. You can then begin adding accounts to your report with the help of the program and start building up your credit report and FICO® Score.


The Basics: How Credit Works

Your credit reports and score are a reflection of how you’ve managed debt. Your credit reports contain information reported by your creditors that’s used to calculate your score. The three-digit score—which typically ranges from 300 to 850—evaluates the risk you pose as a borrower. Lower scores mean more risk, and vice versa.


Your credit report becomes important when you ask a lender to extend you some type of credit. This can happen for small things like financing a cell phone, or for larger needs such as taking out a mortgage for a home purchase.


When you apply for additional credit with a good credit score, it’s more likely you’ll be approved and may get favorable terms from the lender.


Types of Credit

Credit accounts come in many forms, but when it comes to your credit reports and scores, there are three major types of credit that you will encounter.


Revolving Credit

Revolving credit accounts have a set credit limit that you can draw upon, pay back and draw upon again. Credit cards are the most popular form of revolving credits, followed by lines of credit.


Installment Credit

Installment credit is debt you borrow and pay back in fixed monthly installments. This includes personal loans, student loans, auto loans and mortgages.


Service Credit

Service credit is the type of account you have with anyone who provides you with a service and bills you monthly. Your utility and cell phone bills are examples of service credit accounts.


How to Build Credit Fast

Building your credit in a short period of time can be challenging, but there are a couple actions you can take that can help speed up the process.



Improve your credit utilization. Your credit utilization is one of the few aspects of your credit report that you can change quickly. Credit utilization is calculated by dividing the total of your credit card balances by the total of all your credit card limits. You can improve your utilization most quickly by paying down your credit card balances. Increasing your overall credit limit can also help if your lender agrees to it.

Try using Experian Boost. With your permission, it connects to the bank account(s) you pay bills with and looks for qualifying on-time payments. Once found, a record of these on-time payments is added to your Experian credit report and could instantly raise your FICO® Score. The average Experian FICO® Score increase among Boost users who see a lift is 13 points.

As you continue to use credit, keep track of your accounts and payment history, and eventually you should see your information impact your credit score. This process can take time, but with some patience and discipline, you’ll eventually see results.


The Importance of Staying On Top Of Your Credit

To achieve and maintain a good score, you need to develop good credit habits and stick with them. Building credit is a long-term endeavor and it’s important to always stay on top of what and how things can impact your score.


As you build your credit, understanding the factors that go into score calculations will allow you to monitor your behavior and ensure everything you do helps your score.


Information on your credit report that can influence your credit scores includes:



  • Payment history
  • Credit utilization
  • Types of credit accounts you have open
  • How long you’ve been using credit
  • Your debt balances
  • Bankruptcies
  • The number of credit accounts you’ve applied for

Getting Help With Your Credit

If you feel you need extra help building or repairing your credit score, there are plenty of resources available. It’s important to stay educated on how credit works and what impacts your scores. You can read all about credit topics on Experian’s education blog.You can also seek professional help from a credit counselor, who is a trained professional that can help you work through issues with your debt and credit. Credit counseling agencies often offer free consultations where you tell them about your financial situation. If you work with a counselor, they’ll help you understand how to fix the financial issues you’re dealing with, which could ultimately help you improve your credit scores.


Financial Behaviors and Credit Mistakes to Avoid

As you build your credit, there are several financial behaviors that can wreak havoc on your scores.

Here are three common mistakes people make that can have a negative impact on credit:


Not having a budget: Budgeting helps you plan out your income, assigning certain amounts for particular expenses each month. The lack of a budget could lead to you missing payments on your debts, which can have a serious impact on your credit scores. A budget helps ensure you put enough money to the side to cover your financial obligations.

Lack of caution when it comes to sharing your personal information: When hackers or identity thieves get their hands on your personal information, there’s a chance they could use it to open fraudulent credit accounts. This can happen without you noticing and can ruin your credit.You can protect your information by using strong, unique passwords, limiting when you give out your information, and heightening your awareness of where and with whom you share your personal information.

Regardless of whether you are building your credit from scratch or rebuilding a struggling score, regularly monitoring your credit is critical to make sure your efforts are paying off. To keep your eye on your credit reports and scores, consider enrolling in Experian’s free credit monitoring tool so you can regularly log in to check on your progress. You can also get a free copy of your credit reports and scores from Experian.

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