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The Best Ways To Build Credit

Starting on the path to financial freedom? A robust credit score is your key. Whether you’re a beginner or aiming for higher scores, I’ve curated the top strategies to pave your way. Dive in, and let’s build a credit foundation that opens doors.

Building Credit for Beginners

If you’re starting from zero, here are the best ways to build credit.

Graphic image of a woman using her credit card while using a laptop with a text stating "What you need to know about building credit."

Get a Secured Card

A secured card requires cash up front. The amount you deposit will depend on the card limit. A standard minimum is $200. A low limit is beneficial for a starter card because it makes it easier to meet payment deadlines.

You use a secured card the same as a regular credit card. You use the card for purchases, and then you pay the balance before the due date.

Choose a secured card with a low annual fee (or no annual fee.) You won’t have as many choices as you would have in the unsecured credit card market. Still, you can find something affordable if you’re choosey.

Don’t forget that a secured card is temporary. Your goal is to earn enough credit for an unsecured card, which will offer more benefits.

Get a Credit-Builder Loan

A credit-builder loan, co-signed loan, or a secured loan, are loans that help you build credit. Like a secured card, you have to pay upfront before you can use the credit. The money you borrow stays in an account by a lender and is not released until you repay the total sum.

Some banks and credit unions can create credit-builder loans for their clients. The collateral is your pre-existing deposit or a certificate of deposit. Interest rates tend to be high but might be lower than other options.

You can also find credit-builder loans offered online.

Co-Sign an Unsecured Card or Loan

When you get a co-signed card, your name isn’t the only one on the contract. Your co-signer carries the most weight. Suppose you have a family member or trusted companion with established credit. In that case, you can co-sign an unsecured card or loan with them.

Man listening intently as his financial advisor lists out advice for his credit building

The key is to establish that your co-signer is responsible if you don’t pay the total amount or miss a due date. Discuss clear rules and expectations between you and your co-signer.

Much like a secured card, the goal is to create a card with training wheels. That might seem condescending, but you’re starting from zero. Keep your limit and your fees low.

You need to develop a history of paying on time. Paying off more significant amounts will benefit you more, but missing a more outstanding payment will also hurt you more.

Become an Authorized User

Similar to co-signing, this strategy also piggybacks off someone with established credit. You can ask a family member or significant other to make you an authorized user for their card.

It’s essential that you team up with someone with a positive credit history. Your partner’s credit history is now your credit history.

What you pay will depend on the agreement between you and the original or primary user. You can split fifty-fifty. You could agree that the primary user handles most of the bill, but you’re responsible for late fees.

Whatever the details, you and the primary user need to have a clear understanding of your obligations.

Start With One

The best ways to build credit quickly involve doing a lot at once. When you’re at the beginning, you won’t build credit quickly. Careful planners and schedule-keepers can take out a credit card and a loan, or more, to build credit faster. But it’s risky.

Don’t overextend yourself. The goal is to create positive credit. You don’t want to take on too much too quickly.

There are many credit cards out there, and you’ll likely receive a few offers. First-time card users can fall into the trap of signing up for more than one within the first few years after their first card. While opening more than one credit line can build credit faster, it’s more important to raise positive recognition first.

Credit card application form

Get Credit for Your Paid Bills

You can use self-reporting services that transform your good habits into credit. Why not use the bills you’re already paying to build a favorable report?

Rental Kharma, LevelCredit, and RentTrack are a few examples of rent-reporting services that apply the rent you pay to your credit report. Experian Boost can use your cell phone and other utility bills in your credit report. UltraFICO adds your savings balance to your credit report.

Building Credit Faster

Now that you’ve started, you’ll want to keep the ball rolling. While it can take 30 to 60 days before changes affect your score, here are the best ways to build credit quickly.

Choose the Right Card

Credit cards come with advantages and disadvantages, like limits and fees. Choosing the right card requires doing some homework. It’s worth it to sign up for a card that will benefit you the most.

  1. Step one is recording your financial habits. Where do you spend the most money? Some cards offer rewards for groceries, but you don’t need that perk if you order in more than you cook. Some credit cards waive late fees.
  2. Step two is deciding your limits. What can you afford to risk each month? You can start low and qualify for limit increases. Go for higher limits when you’re confident about payment dates.
  3. Step three is adding in your financial goals. Read through the rewards programs of any stand-out cards. Is price protection important to you? Will warranties give you peace of mind, or are they stealing from your wallet?

Pay Your Bills On Time Every Time

Meeting payment deadlines is the simplest of the best ways to build credit. Payment history significantly impacts your credit score.

If you miss a payment due date by a few days or even a month, call your creditor. Some are willing to forgive a short time if you pay immediately. If you can convince them not to report to the credit bureaus, you’ve saved your credit score.

Man paying for his pizza delivery with his card

Missing one or two payment due dates can be harmful, but it’s crucial to get back on track. Credit bureaus record missed deadlines, but the same is true for every bill paid on time. If you can get in the habit of meeting due dates, you can improve your credit.

Increase Credit Limits

The trick to this credit-builder is to increase your limit and keep your balance the same. The difference created by your balance and the higher limit lowers your credit utilization. Credit utilization can impact up to 30% of your credit report. By proving you use less than what is available, you can improve your score.


There are credit cards, and there are loans, and some only have one or the other. If you diversify, you show you’re capable of maintaining more than one credit stream by having at least one of each.
You might not know that there are three types of credit: revolving, installment, and open.

  • Revolving: a line of credit with a limit with monthly payments and interest charges. Credit cards are revolving credit.
  • Installment: A set amount with a fixed and recurring repayment schedule. Loans are installment credit.
  • Open: Open credit borrow from an account that you must pay in full each month. Open is the least common type. Charge cards are an example of this type of credit.

Revolving and installment should be your go-to credit types. They are the most common and are the most beneficial to boosting your credit report.

Non-Profit Lending Circles

A lending circle is a group formed to lend money, typically with zero cost or interest. Informal lending circles are families or friends or even communities. Unfortunately, your friends or family can’t report your on-time payment. But formal lending circles can report to credit bureaus.

Non-profit lending organizations can help low-income borrowers or someone trying to build credit faster. The Mission Asset Fund created a non-profit lending circle gaining popularity in the US.

Maintain a Healthy Savings Balance

It might seem like the obvious answer, but it’s also a crucial part of maintaining your credit score. Many of the best ways to build credit depend on the state of your savings. If you want to meet payment deadlines, you need that amount available to you.

Participating in lending circles, signing for a secured card, and paying bills can be a bit of a juggling act. But sources of credit only benefit you if you can afford them. Overextending yourself can lead to negative scores.