Not sure how to build credit history if you don’t have any history yet? Credit plays an important role in many financial decisions, like getting approved for a loan, renting an apartment, or qualifying for better interest rates. If you don’t have a credit score yet, it simply means there isn’t enough history to calculate one.
Building credit takes time, but it doesn’t have to be overwhelming. Here are six simple ways to get started.
1. Apply for a Secured Credit Card
A secured credit card (meaning the card is backed by collateral) offers an easy and affordable way to start building your credit. Collateral simply means you provide money upfront, called a security deposit, that protects the lender in case you don’t make payments.
That deposit becomes your credit limit. For example, if you put down $300, you’ll have a $300 credit limit. The money stays in your savings account while you use the card responsibly. After you prove that you can make your payments in full and on time, your lender may offer you an unsecured card with a higher credit limit.
We offer a Secured Visa® card with no annual fee*, competitive interest rates, and a quick application process. Applying is simple, and getting a Secured Visa card can be a strong first step toward building credit.
When used responsibly – such as paying off your balance in full each month and making payments on time – secured cards can help improve your credit score or build a solid credit history if you didn’t have one before. With consistent responsible card use over time, your lender may also offer you an option to graduate to an unsecured card in the future.
2. Use Your Credit Card for Predictable Purchases
Once you’ve opened your secured credit card, the next step is to start using it intentionally and thoughtfully.
A simple way to begin is by using your card for predicable purchases each month like gas, groceries, or your cell phone bill. Choosing expenses you already plan for can help you stay in control and avoid overspending.
Because your credit card activity is reported to the credit bureaus, using your secured card and paying the balance in full and on time helps you begin building positive credit history.
The most important part isn’t what you charge, it’s that you pay off the full balance by the due date. Using your card intentionally and paying it off responsibly shows lenders that you can manage credit wisely.
3. Discuss Becoming an Authorized User on a Family Member’s Credit Card
If you’re just getting started, another option is to become an authorized user on a family member’s credit card. This gives you the ability to use and make payments on the account. The account is added to your credit report and, as a result, your score reflects the payment status of the account.
Since your family member’s payment history appears on your credit report, and vice versa, it’s important that you choose a responsible family member who understands the importance of making their payments on time and that you commit to responsible use of the account so you don’t damage their credit, either.
Before moving forward, have a clear conversation about how the card will be used and who is responsible for payments.
4. Use Credit Cards Responsibly
To help build a solid foundation for your credit, use credit cards responsibly by making full payments on a limited number of cards.
A common guideline is to use no more than about 30% of your credit limit. For example, if your limit is $300, try to keep your balance under $90.
It's also important to not open multiple cards at once. Rapidly applying for more credit can make potential lenders hesitant to lend to you. This is because you don’t have a payment history established on these cards to prove that you can manage the payments.
5. Consider a Cosigner
If you’re unable to qualify for a credit card on your own, another option may be to apply with a cosigner.
A cosigner is someone who agrees to take responsibility for the account if payments are missed. Because the lender has that added reassurance, you may have a better chance of being approved.
However, keep in mind that this is a shared responsibility. If payments for the account are late or the balance remains high, it can affect both your credit and your cosigner’s credit. For that reason, this option works best when both people clearly understand the expectations and are comfortable with the commitment.
6. Maintain a Steady Income
While your income doesn’t directly impact your credit score, your ability to make consistent, on-time payments does.
Lenders may also ask about your income when reviewing applications. Showing that you have steady employment can help demonstrate to lenders that you’re safe to lend to and may make it easier for you to be approved for credit.
Learn More About Building Your Credit
Building credit for the first time can feel overwhelming, but it doesn’t have to be complicated. Over time, these simple habits can help you establish a strong credit history and open the door to more financial opportunities.
For more tips on money management, visit our resource Center today.
*Rates, terms, and conditions are subject to change. Please see the Visa® Classic, Visa® Alumni Classic, and Secured Visa® Credit Card Account Opening Disclosure and the Visa® Classic, Visa® Alumni Classic, and Secured Visa® Consumer Credit Card Agreement and Disclosure for full terms and conditions.
The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.