Consumers with little or no credit history may have fewer credit options available to them. If you're new to credit, you can take steps to establish a credit file over time.
Many commonly used consumer credit scores range from 300 to 850. A credit score is calculated based on your credit history, which is a record of how you've managed borrowed money over time. FICO scores are one widely recognized type of credit score used by many lenders.
The Five Factors That Determine Your Score
To build credit effectively, it helps to understand what makes up your FICO score:
- •Payment History (35%) — Lenders want to see that you pay your bills on time. A single missed payment can stay on your report for up to seven years.
- •Amounts Owed (30%) — This category considers several factors related to how much debt you owe, including your use of available revolving credit. If you have a $1,000 credit limit and carry a $500 balance, your utilization is 50%. Keeping revolving balances low relative to available credit can help your credit profile. Some consumer guidance uses 30% as a general ceiling, but lower utilization may be better and no single percentage guarantees a particular score.
- •Length of Credit History (15%) — Considers factors related to the age of your credit accounts and credit history.
- •Credit Mix (10%) — Having different types of credit—like credit cards, auto loans, and student loans—is a factor in scoring.
- •New Credit (10%) — Opening too many accounts in a short time can affect your score. Applications for new credit may result in hard inquiries, depending on the product and application process.
These percentages reflect their general importance for the overall population. The importance of individual factors can vary depending on a person's credit profile.
Step 1: Check If You Have Any Existing Credit History
Before you begin, check if you already have a credit file. You can get free credit reports from all three major bureaus—Equifax, Experian, and TransUnion—at AnnualCreditReport.com. Some people are surprised to find old accounts they'd forgotten about, such as a store credit card or a student loan that was reported.
If you have no credit history at all, you'll see a message indicating that the bureau couldn't find a file for you. This confirms you're starting from scratch.
Step 2: Get Added as an Authorized User
Being added as an authorized user on someone else's credit card may help establish or add credit history if the card issuer reports authorized-user activity to the credit bureaus and the account is considered by the scoring model. This is often a parent, spouse, or close family member.
Before relying on this strategy, confirm whether the issuer reports authorized-user activity to the credit bureaus. The effect on your credit depends on whether the account is reported and how the scoring model treats it.
If the account is reported, it can be helpful if the primary cardholder:
- •Has a long history with the card
- •Pays on time
- •Keeps their balance low
The reverse can also be true. If the issuer reports authorized-user activity and the account has late payments, high utilization or other negative activity, that information may also appear on the authorized user's credit reports and could negatively affect their credit. Review the account carefully before relying on authorized-user status as a credit-building strategy.
You do not need to use the card for the account to potentially appear on your report, but reporting practices vary by issuer.
Step 3: Apply for a Secured Credit Card
If you don't have someone who can add you as an authorized user, or if you want to build credit independently, a secured credit card can be one option for establishing credit history. For a detailed walkthrough of how to obtain your first card when you have no credit file, see our guide on getting your first credit card with no credit history.
A secured card works like a regular credit card, but you provide a cash deposit that becomes your credit limit. For example, if you deposit $500, you may have a $500 credit limit. This deposit protects the bank if you don't pay your bill. Deposit amounts, fees, credit limits, reporting practices and upgrade policies vary by issuer.
When comparing secured cards, consider:
- •Whether the issuer reports to the major credit bureaus
- •Annual fee and other fees
- •Deposit requirements
- •Interest rate
- •Eligibility requirements
- •Whether there is a path to an unsecured product
For an educational side-by-side comparison of secured cards — including fees, deposit requirements and reporting practices — see our comparison of secured credit cards. Inclusion in that comparison is not a guarantee of approval; review each issuer's current eligibility criteria before applying.
Step 4: Maintain Positive Payment History
Once you have a credit card, use it responsibly:
- •Pay on time — Set up automatic payments for at least the minimum amount due. Paying the full statement balance can avoid interest when applicable.
- •Keep your balance manageable — Avoid maxing out your card. Keeping revolving balances low relative to available credit can help your credit profile.
- •Use the card regularly — Make small purchases every month to keep the account active.
Credit-card issuers may report balances at different times. Paying balances down can reduce reported utilization, but the timing of reporting varies by issuer and a $0 reported balance does not guarantee a maximum score.
Step 5: Wait for Credit Score Generation
Credit scores aren't generated instantly. To receive a valid FICO Score, a credit report generally needs at least one account opened for six months or more and at least one account that has been reported within the past six months. During this waiting period, continue using your secured card responsibly.
After about six months, check whether you have a FICO Score through a lender, card issuer or reputable score provider, and continue reviewing your credit reports for accuracy. Your starting score depends on the information in your credit file and the scoring model used.
Step 6: Graduate to an Unsecured Card
Some secured-card issuers periodically review accounts for possible graduation to an unsecured card. Timing and eligibility vary by issuer and account.
Common Mistakes to Avoid
Building credit requires patience and discipline. Avoid these pitfalls:
- •Applying for too many cards — Multiple applications in a short period can create multiple hard inquiries and may affect credit scores. Consider applying only when a product fits your needs and eligibility.
- •Missing payments — Serious late-payment information can remain on credit reports for years and can negatively affect scores.
- •Maxing out your cards — High utilization signals risk to lenders. Keep balances manageable relative to your credit limits.
- •Closing old accounts — Closing a card can affect available credit and may affect utilization and scoring factors depending on the account and scoring model.
Timeline: What to Expect
Building credit is a gradual process. A FICO Score generally requires at least six months of qualifying reported credit history. After that, score changes depend on the information in your credit reports, payment history, balances, account age, new credit activity and the scoring model used.
Sources & References
The following resources from official organizations provide authoritative information on credit building, credit scoring, and credit reports.
- •Consumer Financial Protection Bureau (CFPB) — What are some ways to start or rebuild a good credit history?
- •myFICO — What are the minimum requirements for a FICO Score?
- •Consumer Financial Protection Bureau (CFPB) — When can a credit card company look at my credit reports?
Final Thoughts
Building credit takes time. Focus on creating a positive payment history, keeping revolving balances manageable, reviewing your credit reports for accuracy and applying for credit thoughtfully.