You might find building credit is tricky. It is hardly possible to get a credit card, loan, or even rental space without a credit history.

How can you have a history of timely repayments if no one is extending credit to you?

You can build a good credit history by taking advantage of certain tools available at your disposal.

If you want a credit card, you can first apply for a secured credit card. You can even co-sign a credit card or request someone to make you an authorized user of their credit card.

If you want to build credit without taking out a credit card, you can apply for co-signed, secured, or credit-builder loans. You can also use a phone, rent as well as utility payments for building credit. In some ways, you may not have to pay. But for others, you will have to pay a fee.

Building Credit When You Have No Credit History

If you have absolutely no credit history, you can start building credit by applying for a secured credit card. The secured card is a credit card for which you make an upfront cash deposit as security for the credit you receive. The amount that you will deposit will normally be equal to the credit limit.


The maximum and minimum deposit amounts vary according to the kind of secured credit card you are considering.


For some credit cards, you need to make a minimum deposit of just $200. But there are certain credit cards now that don’t require an upfront deposit.


You can continue using your secured credit card as it is normally used. You can buy things with it. However, make sure that you pay your balance on time to avoid incurring interest. When the account is closed, your deposit will be returned.


Secured credit cards are meant to be used for a limited time only as a way of building good credit. The objective of taking out a secured credit card is to qualify for an unsecured credit card. When you finally qualify for an unsecured credit card, you will likely receive more benefits, and you will not have to make any security deposit.


The secured credit card that you choose should report to the 3 main credit bureaus – TransUnion, Experian, and Equifax. You should also try applying for a secured credit card that has low annual fees.


You will be able to build a thorough credit history if your secured credit card spending is reported to all three credit bureaus.


Pay Bills to Build Credit

Rent reporting firms like LevelCredit and Rental Kharma can help you to build a credit history by reporting your rent payments. Thus, you can use these services to build create a history of timely payments.


Do bear in mind that not all credit bureaus pay attention to rental payments for building a credit history. But some do. And this may be enough for you to build a history of credit for taking out a loan or a credit card.


Experian Boost is another way through which you can have your utility and cell phone bills reported to Experian. This will allow you to build a credit history with Experian only.


Good Credit Habits

Certain good credit habits can help you to build good credit.


However, you should note that building good credit will take some time. You will need to have a history of timely payments to build up your credit history.


To get your FICO score, you must have an account opened for at least 6 months. There should be at least one creditor reporting your payments to major credit bureaus during this time frame.


VantageScore is a competitor to the FICO score, and it can be built more rapidly.


Here are the good credit habits that can help you to build a credit history.

Timely Payments

Paying on time is absolutely imperative for building a solid credit history. You should pay at least the minimum amount. You can improve your credit score by paying more than the minimum amount.

Low Credit Card Utilization

To build a good credit score, you should keep your credit utilization low. That is, you should use only a small percentage of your available credit limit. On all credit cards, your credit utilization should be less than 30 percent. Lower credit limit utilization is even better.

Do Not Apply for Multiple Credit Accounts

When you apply for credit, there is a temporary small drop in your credit score. If you make multiple applications in quick sessions, then your credit score can go down significantly.


You should keep a gap of at least six months between credit card applications. You should also do your research on the best credit card for your spending habits.


You should know that applying for different types of loans, such as mortgage and auto loans, will also result in a big drop in your credit score if they are made in a short period.

Do Not Close Your Credit Cards

You should not close your credit card accounts unless you have a strong reason to. You should only think about closing your credit card if you have a good reason, like poor customer service or high annual fees.


Closing your credit cards can be detrimental to your credit score. If you do not want to use a credit card, you can transfer its balance to some other card that is better for you.

Keep Checking Your Reports and Score

You should regularly check your credit report. You should watch out for errors in your credit report that could be detrimental to your credit score.

Bottom Line

Mentioned above are the many different ways that you can build good credit.