Time to Read – 2 Minutes

 So, you’re starting from scratch and need to build credit? No worries—we’ve got your back. Building credit can seem like climbing a mountain in flip-flops, but with the right steps, you’ll be at the summit before you know it. Here’s how to get started, without the stress.

Step 1: Get a Secured Credit Card

Think of a secured credit card as training wheels for your credit journey. You put down a deposit (usually equal to your credit limit), use the card, and make timely payments. It’s low risk for the lender and a great way for you to start building a positive credit history. Just remember to pay off your balance in full each month—no one likes interest charges!

Step 2: Become an Authorized User

Got a family member or friend with a great credit history? Ask them to add you as an authorized user on their credit card. You’ll get a card in your name, and their good credit habits will reflect on your credit report. It’s like getting a credit score boost by association. Just make sure they’re responsible with their payments, or you might inherit their bad habits, too!

Step 3: Apply for a Credit-Builder Loan

Credit-builder loans are designed specifically to help people build credit. Here’s how they work: you take out a small loan, and the money is placed in a savings account. You make monthly payments, and once the loan is paid off, you get the money. It’s a win-win—you build credit and save money at the same time. Check with your local bank or credit union to see if they offer these nifty loans.

Step 4: Pay All Bills on Time

This might seem like a no-brainer, but it’s crucial. Your payment history is the biggest factor in your credit score. Pay all your bills—credit cards, loans, utilities—on time, every time. Set up automatic payments or reminders if you’re the forgetful type. Consistency is key, and your credit score will thank you.

Step 5: Keep Credit Utilization Low

Credit utilization is a fancy term for how much of your available credit you’re using. Aim to keep it below 30%. For example, if you have a credit limit of $1,000, try not to carry a balance higher than $300. Paying off your balances in full each month is the best way to keep utilization low and your credit score high.

Step 6: Avoid Unnecessary Hard Inquiries

Every time you apply for credit, a hard inquiry pops up on your report and can ding your score a few points. Avoid applying for multiple credit accounts in a short period. Instead, do your research and apply for credit only when necessary. Your future self will thank you for being so selective.

Step 7: Monitor Your Credit Report

Keep an eye on your credit report to track your progress and spot any errors. You’re entitled to a free report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once a year. Review your reports regularly and dispute any inaccuracies. It’s like checking your bank account after a shopping spree—necessary to keep everything in check.

The Bottom Line

Building credit from scratch isn’t as daunting as it seems. With a secured credit card, credit-builder loan, or by becoming an authorized user, you can start your credit journey on the right foot. Pay your bills on time, keep your credit utilization low, and monitor your credit report regularly. Follow these steps, and you’ll be well on your way to a stellar credit score.

Remember, every credit giant started somewhere—so why not start today?