Experts Explain How to Build Credit from Scratch

Building good credit can be difficult, and building good credit from scratch may seem like an even greater challenge. Most people start learning how to build credit when they are in high school or college, but some will avoid anything credit related out of fear or ignorance.

Those who wait to build credit eventually realize that they should have started earlier in order to enjoy the benefits, like better mortgage or car loan rates. Although building credit may be difficult, it's definitely not impossible. We asked a few financial experts for tips on how to best build credit from scratch.

Look into getting a secured credit card

"Apply for a secured credit card. A secured card is backed by a cash deposit. If you place a $500 deposit for your card, you can charge up to that amount. A secured credit card can be a great way to build a positive payment history and works the same as a normal credit card. You can use your secured card to make regular purchases, and you’ll receive a statement to be paid by the due date. One key difference with a secured card is that if you fail to make payments, the card issuer may take your deposit." — Megan Robinson, Financial Coach and Personal Finance Reporter for

"Get a secured credit card. There are plenty of secured credit cards that don't require a credit check and help you build credit using a card with funds you've already put on the card." — Sarah Moe, Money Coach at Flauk

Pay your bills on time

"One way to build your credit from scratch is to pay your monthly bills on time. Some folks don't know this, but that helps you build a credit score." — David Bakke, Credit Expert at Money Crashers

"The first step to building a good credit score is signing up for a credit card and making on-time payments every month. However, qualifying can get difficult when you may already have a low score. I would then recommend looking into alternative methods for building up your score, like reporting your on-time rent payments to a credit bureau through a credit tracking service or making sure to consistently pay off a car or student loans that can also have an impact on your credit score." — Jason Hill, Financial Advisor and Founder of Client Focused Advisors

"Paying any doctors' or utility bills in a timely manner is very important, as unpaid bills could be sent to collections which could seriously damage your credit score. To build your score fast, save enough money to pay off your credit card bill in one payment and keep a $0 balance, or at the very least, do not allow your balance to exceed 30 percent of your credit limit. If you don’t have a credit card, be sure to set a calendar reminder to mail in a check or pay over the phone with your debit card before your balance is due." — Jill Caponera, Consumer Savings Expert at

Be smart when you use credit cards

“Look no farther than two to three credit cards. The trick is to only use them for occasional purchases already in your budget and keep the balance under 30 percent utilization. There is no need to take on large debt such as auto loans, to build credit. Credit cards will do it faster and with much less debt load!” — Carla Blair-Gamblian, Credit Expert at Veterans United Home Loans

"Don't apply for too many cards right away because it will have a negative effect on your score. After you get the first one, wait eight months before applying for anything else." — Joyce Blue, Money Relationship Expert at Empowering You Life Enhancement Coaching LLC

Consider getting a co-signer

"If you have a responsible family member whom you trust, ask them to cosign on a small loan or unsecured credit card. With a co-signer, you are still legally required to make payments to your loan or credit card. If you fail to do so, however, the financial burden falls on your co-signer. This option is best if you have a consistent income and are confident you can make your payments on time. If not, it can negatively impact the credit score of both you and your co-signer." — Megan Robinson, Financial Coach and Personal Finance Reporter for

"Getting an auto loan or personal loan and making on-time payments could really help to jump start your credit, but getting such with no credit history in the first place could be tricky. Asking someone with good credit to co-sign your auto lease, for example, could be your answer for not only getting the lease approved but also getting a better deal on the monthly payments and interest rate. Keep in mind, if you are unable to make the lease payment, your co-signer will be on the hook for the expense, so be sure to have a stable job and an emergency fund saved that can be tapped to cover these payments should you lose your job." — Jill Caponera, Consumer Savings Expert at

Stay on top of credit reports

"Always check your credit reports for errors and discrepancies and correct the issues immediately. This can make a huge impact on your credit in a short period of time." — Jeffrey Bumbales, Director of Marketing at Credibly

Become an authorized user

"Is there a member of your family whose credit is already well-established? Consider asking them to add you as an authorized user on one of their credit cards. As long as they continue to make purchases and repay their balance to maintain good credit, you’ll also reap the benefit of watching your credit score climb." — Ennie Lim, Co-founder and President of HoneyBee

"As an authorized user, you get a credit card with your name on it through someone else’s account. You can use your card to make purchases, but you are not responsible for paying the balance. Legally, the primary account holder is the only one liable for charges to the account. This is a good option for teens and college students who don’t make a consistent income to keep up with payments, but still want to be proactive about building their credit." — Megan Robinson, Financial Coach and Personal Finance Reporter for

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Key Takeaways: There are several steps you can take to build credit from scratch

• Look into getting a secured credit card

• Pay your bills on time

• Be smart when you use credit cards

• Consider getting a co-signer

• Stay on top of credit reports

• Become an authorized user

The Bottom Line

Clearly, credit is important in today's world. Your credit scores can either open doors for you or close them. If you have bad credit, you might want to consider looking into credit repair services. If you have no credit history, try doing your own research regarding good credit habits and follow the tips mentioned above to start your credit-building process.

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