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Posted under: Opinion

How To Get Credit If You Have None (And How To Build It Once You Do)

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Taking responsibility for your credit score is a major part of successfully “adulting.” You know a good credit score is necessary for securing that lease you want, being approved for a car loan and getting lower interest rates on your credit cards, but do you know how to improve your score before you can get those things? For many of us, even getting credit can be a struggle. You have to have credit to build credit, but figuring out that first step seems impossible for so many.

Here are the four ways to start building credit now

1. Ask a friend to become an authorized user

If you have a trusted partner or sibling who has a credit card, then you can be added onto the card as an “authorized user.” The result is that you will inherit the good (and bad) credit history of the cardholder. You don’t even have to use the card — simply being on the account as a fully authorized gives you the benefits of the account holder’s on-time payment history each month. If you don’t trust this person to be reliable with the account, don’t even consider this option. Because if the cardholder stops paying on-time, then both you and the cardholder will end up with lower credit scores. Beware and choose wisely.

2. Ask a friend to become a co-signer

If you want to get credit, but don’t have a credit score, then consider asking a trusted friend or family member, who has a good credit score, to become your co-signer. Unlike with an “authorized user” option, if you don’t pay, then the co-signer is on the hook for making on-time payments. In other words, you need to make sure that you’re ready for this responsibility.

3. Get a secured credit card

If you apply for a credit card — whether a department store credit card, student credit card or any other credit card, and you get rejected, then there is an alternative: a secured credit card.  

Secured credit cards or “secured cards” are backed by an upfront cash deposit that is held as long as the secured card is active. Now, do not confuse secured cards with a prepaid or reloadable debit card. With a debit card, you can spend the money that you deposit. With a secured card, you have to make an on-time monthly payment at the end of the month — just like a regular credit card. The downside is your upfront cash deposit is as long as you have this card. Keep in mind, secured cards are not meant to be permanent and with good behavior, you should be able to graduate to a regular, unsecured credit card. When choosing a secured card, pick one with a low annual fee and that reports to all three credit bureaus: Equifax, Experian and TransUnion.

4. Get a credit builder account to build credit and save

One option that lets you build credit and save is Self Lender. Once you join, you pay $12 to open a credit builder account and then $48.50/month for 12 months. Each month your payments are reported to all three credit bureaus, helping your build credit. After 12 months, you get back $550 and even a little interest. It’s an easy way to save money, build credit and overall come out on top in a world where building credit can feel like an exclusive club.

Now that you’ve established credit, it’s time to build on it.

Staying informed about how to continue to build good credit is important for your future success. Don’t brush it under the rug because they’re uncomfortable or your student loans still have a huge balance. Be true to yourself and face the facts; it’s really not that bad once you get started.

1. Make every payment on time

This one is simple. Making your payments on-time builds your credit. Missing payments is detrimental to your score. The simplest way to build credit is not necessarily to try all of these tricks and tips — even just doing the basics like paying on-time really well is the key to success.

2. Use smart credit utilization

Don’t let your balance exceed 30 percent of your credit limit. Using your full limit or keeping your balance high is detrimental for your credit score.

3. Keep new accounts down

Don’t rush out immediately and sign up for a bunch of new accounts. Keeping the accounts you have for longer periods of time ups your credit age, which helps raise your credit score. Newer accounts lower your average credit age, which makes it harder to bring that score up.

4. Check your report regularly for any errors

Mistakes happen. Don’t assume that these credit bureaus are correct 100 percent of the time. Being aware of changes in your credit report and knowing what the numbers should look like will help you to detect any potential errors.

5. Have a variety of accounts

Don’t just rely on your student loans or a few credit cards for building your credit score. Having different accounts will help keep your credit report well-rounded and healthy.

6. Don’t carry a balance

There’s a myth that keeping a balance on your account will help build your credit score, but that’s not true. Keep things low and pay it off when you can. You should regularly use your card, but that doesn’t require keeping a balance.

What tips helped you grow your credit score? Share with us in the comments below! Healthy credit can be just around the corner with a little honesty, strategy and persistence.


And for more information on credit and how to build it, check out government information and resources here.


This post is brought to you in collaboration with Self Lender.
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