How to Build Credit From Scratch: 6 Proven Ways to Start

Having no credit history can be almost as frustrating as having bad credit: it's harder to rent an apartment, get a car loan or even a phone plan without a deposit. The good news is that building credit from zero is straightforward. You need an account that reports to the credit bureaus and a few months of on-time payments.

How long does it take?

Most credit scoring models need at least one account that's been open for about six months to generate a FICO score. From there, a strong score takes consistent on-time payments and low balances over time.

6 ways to build credit from scratch

1. Secured credit card

You put down a refundable deposit, often $200–$500, which usually becomes your credit limit. You use the card like any credit card, and the issuer reports your payments to the bureaus. Look for one with no annual fee that reports to all three bureaus (Equifax, Experian, TransUnion) and offers a path to "graduate" to an unsecured card and get your deposit back.

2. Become an authorized user

A parent, partner or trusted family member can add you to their credit card. If the issuer reports authorized users, the account's history may appear on your credit report. Only do this with someone who pays on time and keeps balances low; their mistakes can affect you too.

3. Credit-builder loan

Offered by many credit unions and community banks. The loan amount is held in a savings account while you make monthly payments. When you finish, you get the money, plus a record of on-time payments. It's a forced savings plan that builds credit.

4. Student or starter credit card

Some issuers offer unsecured cards designed for people with limited history, especially students with income.

5. Report rent and utility payments

Rent-reporting services and some landlords can add on-time rent payments to your credit reports. Certain tools can also add utility and phone payments to some scores. Results vary by scoring model, but it can help.

6. A co-signer (use with care)

A co-signer with good credit can help you get approved for a loan. They're equally responsible for the debt, so a missed payment damages both of you.

The habits that actually build a good score

1. Pay on time, every time. Payment history is the single biggest factor. Set up autopay for at least the minimum.
2. Keep utilization low. Use a small part of your limit. On a $300 limit, keeping the reported balance under $30 (10%) is ideal.
3. Pay in full. You don't need to carry a balance or pay interest to build credit.
4. Don't open too many accounts at once. Each application can cause a hard inquiry.
5. Keep your first account open to lengthen your credit history.

The full breakdown of how scores are calculated is in how credit scores work.

A 12-month starter plan

Mistakes to avoid

• "Credit repair" companies promising instant scores. You can't pay to erase accurate information.
• Maxing out your card, even if you pay it off later; the reported balance still counts.
• Using buy now, pay later in place of building a real credit history.