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Building Credit

How To Build Credit When You Have None

There is a lot of outdated crap on the internet about how to build credit when you don’t have any and I’m tired of hearing the same stuff over and over.

I’m going to tell you the best way to build credit. It’s actually pretty easy if you follow these steps.

How To Build Credit

These techniques also work if you’re trying to rebuild credit and improve your overall credit score.

Forget About Co-signers And Authorized Users

Back in the day, you remember, trying to get approved for credit in your college years, you used to be able to build credit by becoming an authorized user on your parent’s credit card or having them co-sign on a car for you.

While you can still do this, it’s not going to help build your credit much. Your credit score is no longer affected very much by this.

Nonetheless, you still hear countless people tell you that’s the first thing you should do. They aren’t lying to you, their info is just outdated. That’s OK 🙂

This happened fairly recently… a couple of years ago.

Don’t Apply For A Major Credit Card Yet

Chances are, if you don’t have any credit history, you’re not going to be accepted for a major credit card like American Express, Discover, Chase, Citi, etc.

The thing is, when you apply, however, you’ll suddenly have credit history –history showing that you applied for a credit card. This is called an “inquiry” and multiple inquiries lower your credit score.

Now, sometimes one of the major credit card companies will send you a pre-approval offer even if you don’t have any credit, and the truth is, you might get accepted.

However, I wouldn’t recommend going this route. There are a few reasons why that I’ll get into in a sec.

Main Point: hold off on applying for that shiny new American Express card.

Start With A Secured Card

Think of a secured card as a debit card that builds a credit history. In other words, you aren’t actually getting a line of credit –you have to “secure” the card, you have to deposit the money like a debit card.

However, unlike a debit card, every month it gets reported to the credit bureaus. There are several reasons why this is a great way to build credit.

First, you can’t get yourself in too much trouble. When you have an American Express card with a $5k credit limit on it, you have to be really careful and responsible with it. That’s why they don’t just hand them out to anyone. You have to prove yourself. I know it’s easy to say, “Oh I’d be responsible with it, I’m not an idiot.”, and I’m not saying you are, but it’s very easy to get into trouble unless you have experience with credit.

Another reason why a secured card is great for building (and rebuilding) credit is that you can get one with a relatively small deposit minimum. Many secured cards have deposit minimums as low as $200.

Lastly, it should be noted that most of these cards have an annual fee. That’s just something you’re going to have to deal with for a year or so. It’s a small price to pay for good credit. Trust me, because not having any credit can cost you thousands in the long run.

Credit Builder Loans

Anyone that is trying to establish or rebuild credit after bankruptcy may want to consider a credit builder loan.

Though, this type of loan can help people trying to build credit for the first time in their lives.

College graduates, newly divorced or immigrants new to the country could all benefit from a small credit builder loan to get them rolling.

For example, college grads, who don’t have credit cards can use a credit builder loan to establish a great credit history and in turn have an easier time renting an apartment or getting a cell phone plan in their name finally.

These types of first-time borrowers will likely see a bigger boost in their credit score than someone who’s rebuilding their credit.

You Need To Have Perfect Payment History

Once you get your secured card, make sure you pay it every month. Don’t mess this up! Also, don’t make the mistake of not using the card.

You need to use the card in order to show that you can responsibly use credit. Remember, that’s the goal here. With that said, you don’t have to use it for every purchase you make.

You can simply use it a few times every month. For example, using your secured card for gas purchases is a great way to go about this.

You will need to build your credit history with this card for about 6 months to a year. So, unfortunately, it does take a while to build credit, but there is no way around this.

Don’t believe people/websites that claim you can do it faster –you can’t. These people aren’t smarter than the folks at FICO. They are liars and crooks.

Now It’s Time For The Big Leagues

Now that you’ve had your secured card for a year or so and it has perfect payment history, you’re ready to apply for a major credit card.

You have many options but don’t expect to receive a huge credit limit. That’s OK! You’ve made progress and you should be proud of yourself.

Having a major credit card on your credit report is great for your credit score (unless you pay late).

In other words, major credit cards are “worth” more than charge cards or secured cards when it comes to your credit score.

Keep On Making Payments On Time

You’ve got some great experience handling credit with your secured card over the past year so pass those good behaviors over to your new major credit card.

Credit cards can be great if you use them wisely. That’s one of the reasons why I said I don’t recommend getting a major credit card in the beginning. You need to slowly move towards it.

Then you’ll “get it”, and everything will be great.

I wish you all the best luck and let me know how it works out!

Also, if any of you want to share your experiences, please do so below!


  1. Thanks for the article. It has given me some good insight. I’ve been debating if I even want a credit card, but I know establishing good credit history could benefit me in the long run. A secured credit card really sounds like a sound idea since I’m depositing my own money. Does this mean, I need to deposit more money every month to maintain usage and its limit?

    1. You don’t have to deposit more money each month… You can open the card with, say $200 – $500 and that should be enough to start building some good credit as long as you pay it off each month.

      1. I lived off grid for past 11 years, i have 0 credit. I am dissable now and i get 750 mo. I have a child to rase and my rent is 700. I do not drive, own a car, never will. I can NOT aford 500 or 200 or even 1. Never will hapon. I have a prepaid card but they dont report. There must be other ways to build credit. For a laymon. So far this system is desinged to keep the poor poor. I have good refn, but no one cares, i pay my bills but no one cares. When will this cycle end?

        1. Im just wondering how you plan on paying your credit card payments if you don’t have the money to pay what you borrow? That’s a very important thing to think about. They are going to see that and you might wanna try CapitalOne . They gave me a $200 limit with a deposit of $49. Im on my way to building my credit. Just a thought, if you ever get a chance of getting a credit limit. You should use that to invest in a way to generate a second income. Good luck and best of wishes for you and your child.

  2. I am a college student paying for my own tuition, rent, phone bill, etc. While for the average working adult $200 doesn’t seem like a lot- it does to a Ramen-noodle-every-night, struggling college student. However, I want to purchase a car in a decent amount of time without ridiculous interest bearing payments. Is $200 really the minimum payment I should be making to establish good credit? What would be MY best option for establishing credit in my case?

  3. Hi Ryan,

    I’m an 18 year old college student in the process of attempting to secure my trip to Rome in the summer and I need loads of advice. I was going to attempt to get a credit card with free flyer miles with purchases over 1000 dollars on the card in the first 3 months etc. However, I checked my credit score for the first time (assuming I might have at least SOME credit because my student loans are in my name), but my credit is very poor! In the 500 range poor. HOW COULD THIS HAPPEN?? I’ve never had to make payments on anything, I don’t have a credit card currently, the only thing in my name is my deferred student loan! What do I do??? I know I would never get a big name card like the AmEx Gold Delta SkyMiles card, (which is really what I need), and I don’t want to have my parents put their name on it instead because then I won’t be building credit. Any advice??

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