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How Do You Build Credit?

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How to Build Credit

Your credit can impact virtually all of the financial aspects of your life. Anything that requires a credit check – like buying a car, getting a mortgage, or even renting an apartment – is made more difficult by having poor credit or no credit history, even if you know you’ll be able to afford the payments. 

So how do you establish credit, and once established, how do you build it?

Best Ways to Build Credit

Fortunately, there are a range of options to help you establish credit and build your credit score. You can: 

  • get a secured credit card
  • be added as an authorized user to a loved one’s credit card, or even 
  • take out a credit-builder loan (or one that’s secured or co-signed). 

To offer more in-depth guidance on how to establish and build credit, we’ve put together some of our best credit-building tips below.

How to Establish Credit

Before you try to establish credit, it can be helpful to understand what exactly credit is. In short, it’s a way for lenders to get a sense of your reliability and financial standing before offering you a loan, so they can gauge the risk you present as a borrower. Credit is influenced by factors like previous debt collections and your payment history. If you have no established credit, lenders won’t know how reliable of a borrower you are, so they may be more hesitant to lend to you. 

If you have no credit history, here’s how you can start building credit the smart way: 

  • Make sure you’re prepared: Before you start applying for loans and credit cards, pause to consider how your application appears to lenders. You’re more likely to get approval for starter credit cards or loans if you have a stable work history, steady income, and stable residential address history. Holding a job and maintaining a residence adds validity to your application and makes you seem more trustworthy as a borrower. If you haven’t had the same job or address for at least three months, consider waiting it out before applying for lines of credit.
  • Apply for a secured credit card: A secured credit card uses cash as collateral against the card. You make a deposit with the card issuer, which they hold onto while the account is active. The deposit may be equal to or slightly less than your credit limit. This presents a lower risk for lenders while allowing you to establish credit. Other than the deposit, a secured credit card works the same as a standard one. You can use it to pay for purchases online and in person. You’ll need to make payments on your balance each month. If you pay your full balance each month, interest won’t be added.  Once you’ve had the card long enough, the issuer may even upgrade you to a standard card.
  • Apply for a store or gas card: Credit cards that are specific to one store or business may be easier to get approved for without having a previous credit history. Department stores, grocery stores, gas stations, and auto parts stores often offer cards like these. If you do get one of these cards, be conscientious about your spending. You should only spend what you can afford to pay off the next month. Making a late payment or maxing out your card will hurt the credit you’re trying to establish.
  • Open a joint credit card: Consider opening a joint credit card with someone you trust. If they have good credit, the card issuer is more likely to approve you both for the account. They will run a credit check for both of you since you’re opening a new account under both names. Keep in mind that any account actions will affect both people’s credit. If the account is well-managed, you’ll establish credit and start building it. If a payment is late or the account limit is reached, it will have a negative impact on both people’s credit. 

How to Build Credit Without a Credit Card

Some people are wary of opening credit cards, for a variety of reasons. There are ways to build credit without a credit card, including:

  • Become an authorized user: If a trusted friend or family member already has a credit card and good credit, consider asking if you can become an authorized user on their account. You’ll receive your own card to make purchases using their credit, while they’re still responsible for making the monthly payments. Most card issuers allow at least one designated authorized user per account. Though credit checks aren’t done for authorized users (making this very convenient), the account’s financial history and details are reported to the credit bureaus – the three entities that determine your credit standing – under both users’ names. Check with your card issuer whether they report authorized user accounts to the credit bureaus (not all issuers do so), as this can help build your credit, sometimes giving it a jumpstart if the other user’s credit is good enough. If the account experiences a late payment or high balance, both parties’ credit will be affected.
  • Apply for a credit-builder loan: A credit builder loan is a small loan (less than $1,000) designed for those with no credit. The lender puts the money into a secure savings account – sometimes one that earns interest – under your name, and you make small payments over a set time period to repay it. Once you complete the payment plan, you are given the money from the loan. The lender will report your monthly payments to at least one credit bureau (Equifax, TransUnion, or Experian), building your credit. Another loan option is to have someone you trust co-sign a loan with you, which means they’d be responsible for making any loan payments that you don’t.
  • Use a credit building service: There are a variety of credit building services which can fix inaccuracies and help repair your credit score, but these can sometimes come with large price tags. Another option is to use a service that will report on-time payments of common bills (like utilities bills, subscription services, and cell phone bills) to credit bureaus. 

How to Build Your Credit Once You Have a Credit Card

If you do get a credit card, how you use it can make or break your credit, too. To build your credit with a credit card:

  • Make payments on time: Your payment history will be reported to entities that determine your credit standing, and late payments will harm it. If you make a payment that’s more than 30 days late, your creditor will report it, and this can negatively impact your credit score. If a payment is 60 days or more overdue, your interest rates may increase, and future lenders will see it as a red flag. Late payments can stay on your credit history for up to seven years. To help avoid late payments, only charge what you know you can pay off in a month or less.
  • Use it sparingly: Your credit usage (how much of your credit limit is being used) is also reported to the credit bureaus. This accounts for a chunk of your overall credit standing and is determined by comparing your current credit account balances to the total credit limit offered to you. For instance, if your total credit limit is $500 and you have a balance of $250, you’re utilizing 50% of your credit. It’s recommended to keep your credit utilization below 35%. Going above that can negatively impact your rating.
  • Keep the account open: Even if you decide you no longer want to use the card, keep your credit card account open. Part of your credit standing is judged based on your average account age, with older being better because it offers more credit history. Closing your account can lower your standing, even temporarily, because the average account age will decrease. To keep the account open, make one small purchase per month, paying it off as soon as you receive the statement. Plus, you never know when you might need the credit card if you get into a tight spot, so it’s wise to keep one around.



Check If You Qualify for the Avant Credit Card

See if you qualify for the Avant Credit Card. Seeing if you qualify won’t affect your credit score.



What Credit Score Do You Start At?

Your credit score is generated by the three credit bureaus and used by lenders to determine your trustworthiness as a borrower. It’s a variable number that can differ between credit bureaus, as they use different models to calculate scores, generating different numbers. The FICO® credit score model is the one most commonly used by lenders. 

The lowest your FICO credit score can be is 300, but the first score generated once you open a credit account and use it for six months may be higher than that, depending on how you’ve managed your credit over that time. 

If you have a score of 300 and it doesn’t improve, you may be unlikely to:

  • Qualify for new large lines of credit, like a car loan or mortgage.
  • Make large purchases that require credit checks or store lines of credit, like a new smartphone.
  • Easily land a new job, as some employers (like military, financial, or legal enterprises) use your credit rating to gauge your responsibility and reliability.
  • Rent a home, as landlords may not trust you to pay your rent on time for the duration of the lease.

If you do find a loan or line of credit that you’re qualified for, a score of 300 could lead to higher interest rates, less flexible loan terms, or a very low credit limit.

If you’re curious about your current score, you can request a free copy of your credit report from the bureaus at The CFPB has more information here.

How Can I Build My Credit Fast?

Since your credit impacts so many aspects of your life, it’s normal to feel a sense of urgency to build credit. However, building credit is usually a “hurry-up-and-wait” situation. Your credit score is a way to show lenders that you’re trustworthy, and that trust takes time to build. 

If you’re smart with your credit – minimizing its usage, making payments on time, keeping your accounts open, and eventually having different types of credit (like a loan and a credit card) – then your score will grow. This can take some time and patience is key.

How Long Does it Take to Build Credit if You Have None?

Some credit score models only require three months of credit history to generate a score, while others require more. To have a FICO score, you usually need to have one credit account that’s been open for six consecutive months and one account that has been reported to a credit bureau within the past six months (these can be the same account). Basically, you should see your first credit score six months after opening a credit account. If you’ve had a credit account for six months and still don’t have a score, check with your lenders or credit bureaus to ensure the account is being reported.

Learn More About Avant Personal Loans & Credit Card Offerings

Whether you want to establish credit or build it, personal loans and credit cards through Avant can help. Loans through Avant feature fast disbursements, fixed monthly payments, and a convenient app that makes managing your payments a snap. If you prefer credit cards, the AvantCard is suited for credit building, with decisions made in minutes. Checking your rates won’t affect your credit score, so why wait? Start building better credit – and a better life – today.


The information provided on this website does not, and is not intended to, constitute legal, financial, or tax advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal, financial, tax or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; Avant does not recommend or endorse the contents of the third-party sites.

Avant branded credit products are issued by WebBank.

Avant, LLC is a financial technology company, not a bank.

* Loan amounts range from $2,000 to $35,000. APR ranges from 9.95% to 35.99%. Loan lengths range from 12 to 60 months. Administration fee up to 4.75%. If approved the actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state.

** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

*** Average FICO score of Avant customers accurate as of October 11, 2022.

†The decision process may take longer if additional documents are requested. Approval and loan terms will vary based on credit determination and state law.

‡ Funds are generally deposited via ACH for delivery next business day after approval if approved by 4:30pm CT Monday-Friday.

Avant of Washington, LLC DBA Avant is a wholly-owned and operated subsidiary of Avant, LLC Nationwide Multistate Licensing System #1440089.

Avant, LLC Nationwide Multistate Licensing System #1243761.

Connecticut consumers: all marketing efforts are associated with Avant of Connecticut, LLC d/b/a “Avant”, Small Loan Company License #SLC-1457409

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