If you’re thinking about making a big purchase, like a car, a new home, or starting a business, you might be worried about not having much credit history—or none at all. Don’t worry, though! Having little or no credit can be a hurdle, but it’s not a roadblock. With the right steps, you can build up your credit and put yourself in a better position to make that big purchase in the future.
Here’s how you can get started:
1. Kick Things Off with a Secured Credit Card
A secured credit card is a great starting point if you’re new to building credit. You’ll need to put down a deposit to get one, but it works just like a regular credit card. The key is to make small purchases and pay off your balance in full every month. This will show lenders that you’re reliable and responsible.
2. Try Out a Credit-Builder Loan
Credit-builder loans are designed to help you create a positive credit history. With these, the amount you borrow is set aside in a savings account while you make regular payments. Once the loan is paid off, the funds are released to you, and your on-time payments get reported to credit bureaus—helping to boost your score!
3. Become an Authorized User on Someone’s Card
If a family member or close friend is willing, you can be added as an authorized user on their credit card. This means you’ll get the benefit of their positive payment history on your credit report. Just make sure it’s someone you trust and who manages their credit well.
4. Get Credit for Paying Rent and Utilities
Did you know that paying rent and utility bills on time can help your credit? Services like Experian Boost and RentTrack allow you to report these payments to credit bureaus, giving you credit for the bills you already pay regularly.
5. Consider a Store Credit Card or Small Personal Loan
Store credit cards are often easier to qualify for and can be a great way to start building credit. They usually have lower credit limits, which can help you stay in control. Small personal loans can also help if used responsibly—just be sure to compare the terms.
6. Ask About Using a Co-Signer
If getting approved on your own is tough, you can ask a family member or friend with good credit to co-sign for you. This means they’ll share the responsibility for the loan. Just be sure to talk it through and understand the risks, as their credit is on the line too.
7. Stay on Top of Payments
Even if you’re just getting started, making payments on time is one of the most important habits to build. Whether it’s a secured credit card payment or your utility bills, being consistent with payments will help you grow your credit score over time.
8. Check Your Credit Regularly
While you’re working on building credit, it’s a good idea to keep an eye on your credit report. This helps you spot errors and see how your efforts are paying off. Lots of free apps let you check your score and report without any hassle.
9. Consider a Financial Advisor
If you’re feeling unsure about how to start or what to prioritize, chatting with a financial advisor or credit counselor can be a big help. They can offer advice and create a game plan that fits your specific goals.
Final Thoughts
Building credit takes a bit of time and patience, but with these steps, you’ll be in good shape to tackle that major purchase down the road. It’s all about staying consistent and taking things one step at a time.
You’ve got this—start today and watch your progress build!
