How to Start Building Credit for the First Time

It’s never too early to start building credit . If you’re starting from scratch, here are a few things you can do to get started.

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Open a Secured Credit Card

One of the best ways to start building credit is to open a secured credit card. A secured credit card is a credit card that is backed by a deposit that you make upfront. This deposit is usually equal to your credit limit. For example, if you open a secured credit card with a $500 deposit, your credit limit will also be $500.

Find a secured credit card with no annual fee

There are a few options available for secured credit cards with no annual fee. The best option for you will depend on your credit score and income.

If you have bad credit, you may be able to get a secured credit card with no annual fee from a credit union. Credit unions are nonprofit organizations that offer financial services to their members. They usually have looser eligibility requirements than banks.

If you have good credit, you may be able to get a secured credit card with no annual fee from a major bank. Major banks include Chase, Bank of America, and Citibank.

To find the best option for you, compare the fees, features, and benefits of different secured credit cards. Look for a card with no annual fee, low interest rates, and rewards that fit your spending habits.

Make a small deposit to open the account

Most secured credit cards require a deposit, which becomes your credit limit. The deposit is usually equal to your credit limit, so if you deposit $500, you’ll have a $500 credit limit. The good news is that your deposit is fully refundable if you close your account and pay your balance in full.

For example, the Discover it Secured card offers 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter. That’s $20 back every quarter just for doing your normal spending. You also get free access to your FICO score and tools to help you build your credit. The only drawback is that there’s a $10 or 3% (whichever is greater) balance transfer fee, but that’s common for secured cards.

Use the credit card responsibly

Now that you have a secured credit card, it’s important to use it responsibly in order to start building your credit history. Here are a few tips:

-Be sure to make your payments on time and in full. This is the most important factor in building your credit history.
-Try to keep your balance below 30% of your credit limit. This shows creditors that you can manage your borrowing and helps keep your credit utilization low, which is good for your credit score.
-Keep your accounts open for as long as possible. The length of your credit history makes up 15% of your FICO® Score, so it’s important to keep old accounts open even if you don’t use them often.
-Avoid opening too many new accounts at once. Opening several new accounts in a short period of time can lower your average account age, which can have a negative impact on your credit score.

If you use your secured credit card responsibly, you’ll start to build a strong credit history that will help you qualify for unsecured credit cards and loans down the road.

Become an Authorized User

Find a family member or friend with good credit

If you’re starting from scratch, one of the best ways to begin building your credit history is to piggyback off of someone who already has good credit. You can do this by becoming an authorized user on their credit card account. As an authorized user, you’ll receive your own card linked to that account, but the account owner is ultimately responsible for any activity on the account (including any debt you might rack up).

If you’re able to become an authorized user on a friend or family member’s credit card, be sure to ask them if they have any tips on using credit responsibly. Use their advice to help you establish your own good credit habits from the start. And once you have a solid foundation of good credit, you can begin working on qualifying for acredit card in your own name.

Ask them to add you as an authorized user on their credit card

You can start building credit by becoming an authorized user on someone else’s credit card. This means that you will be able to use their credit card to make purchases, but you will not be responsible for the bill. The primary cardholder will be responsible for the bill, but your credit history will be affected by the activity on the card.

Becoming an authorized user is a good way to start building credit if you don’t have a lot of other options. It can be difficult to get approved for a credit card on your own if you don’t have any credit history. However, if you can find someone who is willing to add you as an authorized user on their credit card, you can start using and building your credit right away.

There are a few things to keep in mind if you’re thinking about becoming an authorized user on someone else’s credit card. First, make sure that the primary cardholder has good credit. This is important because their good credit will help offset any negative activity that might show up on your credit report. Secondly, make sure that you understand the terms of the agreement between you and the primary cardholder. You don’t want to end up in a situation where you’re responsible for the bill but the primary cardholder isn’t paying it off. Finally, remember that becoming an authorized user is just one way to start building your credit history. If you can, try to get a secured credit card or take out a small loan so that you can diversify yourcredit history.

Use the credit card responsibly

If you are new to credit, using a credit card responsibly is crucial to building a good credit history from the start. Authorized users can help build credit by using the credit card responsibly and making timely payments.

Here are a few tips for using your credit card responsibly:

– Make sure you can afford the monthly payments before you charge anything to the card.
– Use the credit card for small purchases that you know you can pay off quickly.
– Pay your bill on time, every month. This is one of the most important things you can do to build good credit.
– Keep your balance low. Your credit utilization, which is the amount of available credit you’re using, makes up 30% of your credit score. Try to keep it below 30%.
– Review your statements carefully and report any fraudulent activity right away.

Get a Credit Builder Loan

A credit builder loan is a type of loan that helps people build credit for the first time. It works by giving you a loan and then reporting your payments to the credit bureaus. This can help you build a good credit history and improve your credit score.

Find a credit builder loan from a credit union or online lender

There are a few different types of credit builder loans, but the basic premise is the same: you borrow a small amount of money and make regular payments over a set period of time. As you make on-time payments, you build positive credit history, which can help you qualify for better loan terms and rates in the future.

Credit builder loans are typically offered by credit unions, but there are a few online lenders that offer them as well. If you’re not sure where to start, ask your local credit union if they offer credit builder loans. You can also search for “credit builder loans” online to see what lenders come up.

Once you’ve found a few options, compare the terms of each loan to make sure you’re getting the best deal. Some things to look for include:

-The size of the loan: Most credit builder loans are for small amounts, typically $500-$1,000. Some lenders may offer larger loans, but keep in mind that you’ll want to make sure you can comfortably make the payments on time each month.

-The length of the loan: Most credit builder loans have terms of 12-24 months. The longer the term, the lower your monthly payments will be, but you’ll end up paying more in interest overall. If possible, choose a shorter term so you can pay off the loan faster and save money on interest.

-The interest rate: The lower the better! Credit builder loans typically have higher interest rates than other types of loans since they’re designed for people with limited or no credit history. But some lenders are better than others when it comes to interest rates, so it pays to shop around.

Use the loan to build credit by making on-time payments

A credit builder loan is a type of loan that is designed to help people build their credit. It works by putting the money you borrow into a savings account, which you then use to make payments on the loan. This shows lenders that you are a responsible borrower and can help you get access to better loans in the future.

To get started, you will need to find a lender that offers credit builder loans. You can search online or ask your bank or credit union if they offer this type of loan. Once you have found a lender, you will need to fill out an application and provide some basic information about yourself. The lender will then review your application and decide whether or not to approve you for the loan.

Once you have been approved for the loan, the money will be deposited into a savings account in your name. You will then make regular payments on the loan, just as you would with any other type of loan. As you make on-time payments, your credit score will begin to improve. After a period of time, usually 12 months, the loan will be paid off and the money in your savings account will be yours to keep.

Credit builder loans are an excellent way to build credit if you have no previous credit history. By making on-time payments, you can establish yourself as a responsible borrower and get access to better loans in the future.

Monitor your credit score to see your progress

You can get a free credit report from each of the three national credit bureaus — Equifax,Experian and TransUnion — once every 12 months at You can also create a free account at or to view your credit scores and track your progress over time.

Paying your bills on time and maintaining a good credit utilization ratio are the two biggest factors that influence your credit scores, so it’s important to keep an eye on both as you work to improve your credit standing.

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