How to Build Credit for the First Time

No matter how great your sense of humor is, how much education you have or how well you can cook, all a lender is going to see to make a judgment about you is your credit history. This is why it is vital that you build a good credit history early on in life. Your credit impacts more than just your interest rates on credit cards and loans. Poor credit can cause you to be turned down for an apartment, cell phone or the job that you want. Unfortunately, building credit when you have no credit can be tricky. There are, however, steps you can take to successfully build credit for the first time.

Instructions

1

Ask a friend or family member with good credit to add you to his credit card account as an authorized user. Your friend or family member's good payment history on the card will then appear on your credit report.

2

Apply for a secured credit card. Secured credit cards are primarily marketed to those with bad credit or not credit. Your credit rating, or lack thereof, should not factor into your approval. Secured credit cards are safer for credit card companies because they are "secured" by a deposit you must make to the card provider. You may apply for a secured card online or via mail.

3

Use your secured card to make small purchases and pay the balance off in full each month. Doing so helps you build your own positive payment history in addition to the payment history that appears within your credit profile from your friend or family member's credit card account. Continue making purchases and payments for 90 days to create a limited credit history.

4

Visit your bank and talk to a loan officer about taking out a small personal loan and securing the loan with a savings account or car title. A secured loan is less risk for the bank. Your positive credit profile, no matter how limited, also works in your favor.

5

Apply for an unsecured card after making regular payments on your secured credit card and your bank loan for at least six months. The longer and better your credit history, the higher your chances of acceptance. Unsecured credit cards often offer much more attractive interest rates than unsecured cards.

6

Make payments on time to each of your creditors. Your payment history on each of the debts that appear on your credit report accounts for 35% of your credit score.