How to Build Credit from Scratch

If you didn’t know, credit plays a huge role in many financial decisions consumers make. If you do not have credit or have a very limited credit history, you may find that creditors and lenders are reluctant to lend to you.

Thankfully, there are many ways to build credit from scratch. Although you may not be able to build a strong credit history overnight, you can most certainly build credit with a short-term plan.

How to establish credit from scratch

Building credit from nothing can be difficult for some consumers. However, you should note that there are multiple routes you can explore to help establish credit.

Here are some ideas to help consumers build their credit from scratch:

Get a Secured Credit Card

A secured credit card is a great starting point for consumers who may not have any credit or credit history. With a secured credit card, you provide an upfront deposit that acts as your credit limit.

If you were to default on your secured credit card payment, the creditor will just use your initial deposit to recuperate their losses. Once you pay off your balance on time and in full, your credit limit resets.

A secured credit card is a great option for those that fear they may be unable to handle a credit card responsibly.

Become an Authorized User

Almost anybody can become an authorized user on another person’s credit card. If you become an authorized user on another person’s credit card, your name is added to the card owners account.

Thus, their payment activity and available credit can help increase your score. However, it’s important to note that you should only become an authorized user on another person’s credit card if they have a track record of making on-time payments and using credit responsibly.

Get a Small Loan

One of the best ways you can directly build or establish credit is by taking out a small loan. There are even specific “Credit Builder” loans that consumers can take advantage of. Simply repay the loan back on time and in full in order to receive a positive impact to your credit score.

Final Note

All in all, building credit is essential for all aspects of financial life. If you have less than perfect credit and don’t know where to go, CrediReady can help.

Our trusted network of credit repair experts can boost your score and help you qualify for the credit you need. Take a moment to fill out our free no-obligation credit repair inquiry form and start fixing your credit today!