Building Your Credit Score From Scratch

Credit can influence your life in a number of ways: from helping you get a better interest rate on loans, to nabbing you a credit card with lower fees and more rewards, to potentially factoring into the decision of a future landlord or employer. If you’re building your credit score from scratch, have no fear! Here are a few tips to help build your credit from the ground up.

Get a Student Credit Card

Student credit cards are specifically designed for young people with a short or non-existent credit history. These cards are usually easier to get approved for as compared to a traditional card, and offer most of the same features—albeit with a lower credit limit. While rewards and features may be geared toward students, non-students can also apply for a student credit card. Check out the HUECU Student Credit Card if you’re interested in earning great perks while also establishing a credit history.

Become an Authorized User

If it doesn’t make financial sense to have your own card, consider joining the card of a family member. As an authorized user, you’ll get a card in your name and the ability to spend on the card, while the main user remains responsible for the account. If payments are made on time, you’ll be automatically building a positive credit history. However, be sure that the main account holder is a person you can trust to make smart financial decisions: if the primary cardholder is late on payments, that could affect your credit score.

Apply for a Secured Credit Card

A secured credit card can help you build your credit score from scratch, or bounce back from a poor credit score. The difference between a secured credit card and a traditional, unsecured card is that with a secured card, you pay a cash deposit to the credit card issuer up front. If your bill doesn’t get paid, the issuer will take what you owe from the deposit. Of course, it’s still important to pay your bills on time to build a good credit score! Once your score is high enough to qualify you for an unsecured card, you can apply for a new credit card and have your initial deposit returned.

Put Utility Bills in Your Name

Utility and phone bills are reported to credit bureaus, so if your bills are currently in the name of parents, landlords or roommates, consider putting them under your name instead. While that might mean temporarily coming off a family phone plan, or rearranging how household bills are managed, the adjustment can be worth it to help build up your credit history.

Take Out a Credit Building Loan

Some loans are specifically designed to help borrowers build credit. With a credit building loan, the lender will hold onto your loaned funds in a special savings account, then use those funds to make monthly payments on the loan—building up your credit score in the meantime. Do keep in mind that this credit building technique may come with additional cost, as your loan will have fees and interest. If you’re interested in this option, speak with a financial institution about what’s available and what your final cost would be.

Capitalize on Credit From Another Country

If you’re coming to the US from another country, you may find that you don’t qualify for local financial products despite having a strong credit score in your home country. International credit history isn’t automatically shared to credit bureaus in the US, but you can often work with your international bank to get a US credit card. Start using your card as soon as possible—and paying it off—to build up your US credit history.