How to Build Up Your Credit from Scratch

father and daughter holding credit card

March is National Credit Education Month. It’s the perfect time to learn more about the importance of your credit score and how to manage it properly. But what if you’ve never even had a credit card or your credit history is non-existent?

Building a credit history from the bottom up can be tricky business. It may take a while until you see results. But, with time, effort and responsible financial choices, you can build an excellent credit history, which will positively impact your financial health for years to come. Here are some helpful tips on how to build up your credit from scratch.

Open a secured credit card 

Stop by Partner Colorado and open your first credit card. Our Credit Builder Share Secured Visa® is designed just for first-time card users or those wanting to repair their credit. Your credit limit is determined by the amount of savings you pledge as collateral. Secured credit cards are not long-term solutions, but they’re great first credit cards since almost anyone can qualify.

Open a low-balance card

Credit cards offering a low credit limit give you an opportunity to break into the credit card world when you’re starting out. If you can swing it, open two to three of these cards under your name to help build your credit. As with any credit card, make sure you’re paying your bills on time every month.

Use your cards responsibly

It’s not enough to have credit cards open in your name—you need to use them too. No matter your credit limit, you’ll have to be careful to spend just a bit each month. Otherwise, your credit utilization, or the ratio of available credit you use, can be too high and can actually hurt the score you’re trying to build. For this reason, keep your card spending to less than 30% of your available credit limit and pay your bills in full and on time. You can set up an automatic payment so you never miss a bill.

Become an authorized user

If you have a family member or partner who has an excellent credit score and a credit card they’ve had for a while, ask them about making you an authorized user on their card. This will add the card’s payment history to your growing credit file and can significantly increase your score. Keep in mind, though, any time you use the card, the primary account holder will be responsible for paying the bill.

Building and maintaining a healthy credit file can take serious effort and commitment, but it’s one of the most crucial elements of a financially responsible life. If you’re looking for a little extra financial help, as a member you can take advantage of our Partners in Financial Health program. We offer loans to build or rebuild your credit, free credit counseling and free online educational resources to help you on your financial journey.