How to Build Credit

The key to building credit is simple. It takes time, discipline, and the right banking institution for your needs. It’s easier to get started with building your credit than it is to bring up bad credit. Managing debt is a big responsibility so setting yourself up for success is very important.

Credit Cards

  1. The very first step to building credit is to open your first credit card account. Check out our blog post to see whether you should look at using a bank or a credit union. The best way to use your first credit card is for payments that you already make such as gas and groceries. Pay off the balance immediately and in full every month. If you can’t get approved for a credit card, look into getting a secured credit card. A secured credit card is typically tied to a savings account giving you a limit of the balance or a percentage of it. Be sure to ask whether the secured credit card will be considered in your credit report or if it will open the possibility of getting a credit card in the future.
  2. Another option is becoming an authorized user or opening a joint account with someone who already has good credit. The liability of payments is then on both individuals so people with good credit may not be as willing to do this since any missed or late payments will affect their credit score as well.
  3. Part of your credit score is the ratio of credit limit and utilization. The goal is to use under 30% of your credit limit so lenders can see you are responsible with credit. The best way to build credit is to keep to these guidelines of using under 30% and every 6 months, if you have followed this guideline, ask for an increase on your credit limit from your lender. Make sure you don’t increase your spending over 30% or that will have a negative impact on your credit.
  4. If you are an avid shopper, and a store you frequent offers a store credit card, consider applying for one. If you would be spending money at this store anyway, use their card, make the payment in full right after, and build credit.


  1. If you have a student loan, this payment is reported to the credit bureaus so the easiest way to build credit is to make your payments on time every month.
  2. Auto loans are one of the easiest types of loans to receive and is also included in your credit history. The tricky part is finding good interest rates and terms. Once you find the right lender, make your payments every month and watch your credit score increase. Similar to credit cards, you may need a co-signer to buy a vehicle which puts the burden on them if you don’t make payments. Also, talk to your credit Union or bank first to see if they will give you the loan. Interest rates from your dealer can be extremely high so be careful. Here are a few facts you should know about buying a car from, a quick “Need to Know” for you.
  3. A home mortgage may also be hard to obtain, but if you have purchased a home, payments made will begin to build credit for you. Military Times has  a great article on what you need to know about a VA loan.

Asking for Credit

  1. If you’re just starting to build credit and have never had any lines of credit (cards, loans, etc), but have rented your home, paid for utilities, made cable/internet payments, or others, you may be able to use this as proof. Contact your landlord, utilities company, and others to report your on-time payments because it is optional for them to do so, but could help when you apply in person for credit.

Information on your credit report that can influence your credit scores includes:

  1. Payment history
  2. Credit utilization ratio
  3. Types of credit used
  4. How long you’ve been using credit
  5. Total balances on all debts you owe
  6. Public records like tax liens or bankruptcies
  7. The number and recency of credit accounts you’ve applied for


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