How to start building credit: 10 easy options

Written by
Geoff Williams
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There’s no sugarcoating it: A low credit score can be demoralizing, not to mention place a significant roadblock in the path to a successful financial future. But there is good news. It isn’t as difficult as you might think to start building credit.

The steps below offer options and strategies for how to start building credit. Keep in mind, this is not a step-by-step strategy where you have to do all of these credit building tactics, or even should. Think of these strategies as a buffet of options. Some will be easy to do; others may require a bit of work. Some will be practical for your situation; others won’t. But if you try at least one, and ideally multiple, you should see a measurable, positive impact on your credit score.

Check your credit reports and correct any errors

Keeping an eye on your credit reports is always a good idea. Blame it on social media and companies selling lists of clients to other companies or just the extent of digital lives these days, but when it comes to credit reports, things happen:

  • You could have somebody else’s missed payments on your credit report.
  • You could have old, paid debts listed as though you didn’t pay them off.
  • You could have the same debt, listed two or three times (especially various debt collectors have owned it).

If the information on your credit report is extremely bad and inaccurate, fixing it could potentially send your credit score soaring. The more likely scenario is that just one or two items are inaccurate; even then, correcting those could rapidly improve your score.

THE FINE PRINT: How to check your credit report? It isn’t hard. Go to, the only website the federal government recommends going to for free credit reports. Federal law entitles everybody to a free copy of their credit report every year from each of the three nationwide credit bureaus (Experian, TransUnion and Equifax). Since the pandemic started, however, borrowers have generally been able to access their credit reports more often that that. As of the time of this writing, hrough December 2023 you can get weekly free credit reports at

Become an authorized user

Becoming an authorized user can help build your credit, or it may have a neutral effect, or it may actually hurt your credit. If you become an authorized user on another person’s credit card – for instance, your parent’s, or maybe your adult child if you’re trying to rehabilitate your credit – being an authorized user could help you establish a credit history or build your credit.

Two important points to keep in mind:

  1. Check to ensure the credit card issuer reports authorized user activity to the credit bureaus. If it doesn’t being an authorized user won’t impact your credit at all.
  2. Only agree to authorized user status for a person whom you trust to responsibly and consistently pay their bill. If the primary cardholder runs up huge debts and doesn’t pay them off, being an authorized user could actually hurt your credit.

As an authorized user, you aren’t ultimately responsible for the items you charge to the credit card, but certainly your relationship with the primary cardholder could suffer if you’re irresponsible. Likewise, if the person paying off this credit card misses payments, pays late or otherwise handles the card irresponsibly, their black marks could appear on your credit report and will likely lower your credit score. So, again, this isn’t a sure-fire credit building strategy.

Pay off any existing debt as soon as possible

This, however, is a sure-fire way to start building credit. Of course, anyone reading this, if you have a lot of debt, you’re thinking, “Gee, THANKS. Now why didn’t I think of THAT?”

Yes, it’s obvious advice, and, yes, paying off debt can be extremely difficult. It can take some people years. But paying off debt is the holy grail when it comes to building credit. We couldn’t not mention paying down debt as a strategy for raising your credit score.

To make paying off your debt simpler and perhaps less expensive, consider these options:

  1. Consolidate debt with a personal loan. If you can qualify for a personal loan with a lower interest rate than that on the other debts you’re carrying, it can save you money to take out the loan and pay off those other debts with it.
  2. Utilize a balance transfer credit card offer. Balance transfer credit cards are rare for people with fair and lower credit, but they are out there, particularly if you check with credit unions and smaller banks. If you’re working to pay off credit card debt, a solid balance transfer offer could save your a lot of money and effort.

Also, keep in mind that your credit score can increase even while paying down your debts. Simply paying your bills on time and spending within your means work in your credit’s favor.

Open a credit card

Just as too much debt can bring down a credit score, not enough debt – or, more accurately, not enough access to credit – can hurt a credit score. Lenders like seeing potential borrowers have a history of borrowing and doing it successfully. Whether it’s a student credit card (you’re in college and just getting started with credit), or a secured credit card (a solid option for building or rebuilding credit and we’ll discuss it more below) or just a traditional credit card, getting a new one offers a path to start building credit. There are a couple of key reasons this happens:

  1. You improve your credit utilization. Lenders want to see low credit utilization, which is the ratio you’re borrowing in relation to the amount of credit you have access to. If you have a $10,000 limit on one credit card and you carry a $1,000 balance, you have 10% credit utilization. The recommendation is to keep that percentage under 30%, but the lower the better.
  2. You have the opportunity to show responsible use of revolving credit. The best credit histories show a variety of credit types, both revolving and installment. Credit cards are revolving credit, so they add a new layer to your credit history.
  3. You can show responsible payment history. Consistently paying your bills on time is one of the most important things you can do to improve your credit; therefore, paying a credit card statement balance on time is another opportunity to show that.

Consider a credit builder loan

These are loans that some banks and credit unions offer. Some come with additional fees, so check the fine print carefully, but many provide excellent terms allowing people to build credit without entering into a traditional loan/debt situation.

Credit builder loans basically work like this: If your bank offers you a $1,000 credit builder loan, you will eventually receive $1,000, but you’ll pay for it before you receive the money. Over the course of the loan, you will make regular payments into the account and, once you’ve fulfilled the terms of the loan, you receive access to the full amount.

By the end, you’ve paid your bank $1,000 plus maybe some fees or interest. But you also have $1,000 (plus maybe a little more, from interest, if the loan is set up that way) that is yours to use however you want – no paying it back, since you’ve already done that. Along the way, the lender will have reported your responsible payment to the credit bureaus, which in turn can start building your credit.


You would expect something marketed as a “credit builder loan” to come from a lender that will report account activity to the three bureaus. But it never hurts to ask. Ensure your lender will report your payment, so you know your good habits will pay off.

Use a service that includes utilities, etc. payments in your credit report

Unfortunately, responsible payments of regular bills like utilities and rent don’t typically help with building your credit score. That is unless you take advantage of one of the serveral services that promises to include those payments on your credit report.

One such service is Experian Boost. With this service, Experian Boost connects to your bank and credit card accounts to search for bills you regularly pay but aren’t already reported to the credit bureaus. (Generally, that means streaming bills, utility and cellphone bills.) According to Experian, the process takes about five minutes, and you should see an improvement with your credit score, immediately.

THE FINE PRINT: Experian Boost should help your FICO and VantageScore credit scores, according to Experian. That said, the information it collects with only show up on an Experian credit report. if you have a lot of new, positive information that goes onto the Experian credit report, that won’t help you if a lender is looking at an Equifax or TransUnion credit report.

On the up side, rest easy if you had a few months where you paid your cellphone bill or utility late? That’s OK; Experian Boost only pulls positive information from your bank and credit card accounts.

Take out a loan

This is kind of a DIY version of a “credit building” loan. You take out a loan and pay it back responsibly and promptly.

Lenders like seeing that you can borrow and successfully pay back a loan Paying back loans is a good way to establish a strong credit history, and it will lead to a better, healthier credit score. And as noted earlier, if lenders know you are a trustworthy borrower, they are more likely to want to lend you more money.

Obviously, only borrow money you can afford to pay back, taking into account any additional interest payments you’ll accrue. Since you’re credit isn’t excellent, your interest rate will likely be on the higher end. In the end, this option requires a lot of planning and thoughtfulness, not to mention will likely cost you something. Enter into this situation with a clear plan.

Pay all your bills on time, every time

Yes, it’s a boring solution to building credit, but it is the single most important. In a way, paying your bills on time won’t build your credit so much as ensure your credit score doesn’t go down; missed payments and late payments will throttle your credit score. There are a lot of bills that you’re paying that you don’t get credit for paying on time by the credit bureaus (remember those utility and cellphone bills mentioned above), but if you pay them late or not at all, you can be sure those credit bureaus will hear about it.

All that said, paying your bills on time, every time, does help build your credit. By paying bills on time over the years, you construct a healthy credit report. Lenders like seeing that your credit report doesn’t have a lot, or any, missed and late payments.

To reiterate, paying your bills on time is the most important credit building strategy there is. It’s non-exciting, and it won’t help you raise your credit score quickly, but if you’re doing all of the other credit building strategies on this list but not paying your bills on time, your credit score will likely plummet.

Get a secured credit card

Yes, we mentioned this earlier, but let’s go more in depth. If your credit is bad, you may want to consider applying for a secured credit card to start building credit. How do secured credit cards work? To establish your credit line, you provide a security deposit that the lender holds until you close your account or graduate to a traditional card. Your credit line is usually equal to the security deposit.

The idea is that if you use the credit card successfully (that is, you pay back anything you borrow on time), you’ll graduate to an unsecured credit card. The bank will then return your security deposit to you. Using a secured credit card successfully should cause your credit score to climb. Maybe by a lot. Many factors go into how much, or little, a credit score changes. But using a secured credit card successfully will almost certainly build your credit..

THE FINE PRINT: Remember, if you don’t use the secured credit card successfully, you will negatively impact your credit. Only apply for a secured credit card if you can responsibly manage it.

Request a higher credit limit

We’ll end with this credit building strategy since it seems counterintuitive and shows how surreal the world of credit scores and credit reports can be.

You can request a higher credit limit and see your credit score go up.

Now, that’s not guaranteed. You could request a higher credit limit and be turned down (that should have no effect on your credit score, however). Or you could request a higher credit limit, be granted one, and then spend so recklessly that you bring down your credit score.

But if you request a higher credit limit – and do not borrow more money on the credit card – that can improve your credit score.

Why does requesting a higher credit limit and not borrowing more money potentially improve your credit score? Because of that credit utilization ratio we mentioned earlier. Lenders want to see borrowers who have a lot of credit available, but who aren’t using much of it. (Again, the ideal is to borrow less than 30% of the money you could borrow. If you can keep it under 10%, lenders like that even more.)

So keep your utilization low, but don’t always stay at 0%. Lenders can’t learn much from your inaction. They can’t judget your odds of paying loans back if you one day do decide to borrow money.

Geoff Williams
CardRatings Contributor

Geoff is a freelance journalist and has been since the 1990s. He specializes in personal finance and small business issues and has seen his work published with numerous news outlets including The Wall Street Journal,, Reuters, The Washington Post and Consumer Reports. He also...Read more

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