How to Build Credit
On February 25, 2026 By newsroom Topic: Saving And Investing Money
Building credit is crucial for financial stability and securing loans, credit cards, or even rental agreements. Here’s how to start building and maintaining good credit:
1. Get a Secured Credit Card
- What it is: A credit card backed by a cash deposit (e.g., $200).
- How it helps: Use it like a regular card, make timely payments, and your deposit is refunded when you close the account or upgrade.
- Tips:
- Choose a card with low fees.
- Ensure it reports to all three credit bureaus (Equifax, Experian, TransUnion).
- Alternative: Explore cards like Petal or Deserve, which don’t require deposits.
2. Try Credit-Builder Loans
- How they work: Loan funds are held in a savings account until fully repaid. Payments are reported to credit bureaus, building your credit history.
- Where to find:
- Credit unions or community banks.
- Online services like Self or SeedFi.
3. Use a Co-Signer
- How it works: A co-signer with strong credit backs your loan or credit card.
- Caution: Both parties are responsible for repayment, so communicate expectations clearly.
4. Become an Authorized User
- What it is: A family member or friend adds you to their credit card.
- Benefits:
- Their positive payment history appears on your credit report.
- You don’t need to use or possess the card to benefit.
- Ensure: The card issuer reports authorized user activity to credit bureaus.
5. Get Credit for Bills You Already Pay
- Services:
- Rent Reporting: Use platforms like Rental Kharma or LevelCredit to add rent payments to your credit report.
- Utility Payments: Experian Boost allows phone and utility payments to be included in your Experian credit file.
6. Practice Good Credit Habits
- On-Time Payments: Pay bills on time—this is the single most important factor for your credit score.
- Keep Utilization Low: Use less than 30% of your credit limit (ideally <10%).
- Avoid Multiple Applications: Space out applications by 6 months to avoid damaging your score.
- Keep Old Accounts Open: Longer credit history improves scores; consider downgrading instead of closing cards with high fees.
7. Check Your Credit Scores and Reports
- Monitor Progress:
- Use free tools like NerdWallet to track your credit score and reports.
- Review for errors and dispute inaccuracies with credit bureaus.
- Frequency: Request free credit reports weekly at AnnualCreditReport.com.
Pro Tip: Credit-Building Timeline
- FICO Score: Requires at least 6 months of reported activity.
- VantageScore: Can be generated faster with limited history.
By using these strategies and practicing good credit habits, you can build a solid credit foundation and enjoy the financial opportunities that come with a strong credit score!
