How Do I Build Credit When I Don’t Have Credit?

Generally, you need a decent enough credit history to get credit. But how do you start?

It’s the riddle many credit applicants face, especially if they’re young and just starting out on their own financially: to get credit you need to have had credit. But then how do you get it in the first place? Here are some good ways you can get started with credit, even if you don’t have any credit history.

Get a student credit card.

Credit card companies know young people may not have much of a credit history (if any!) to look at. That’s why many offer student credit cards. These generally have lower credit limits, which helps creditors manage the risk of lending to an unknown creditor.

Get a secured credit card.

Secured credit cards work much like other credit cards do: you use them to pay for things, then get billed for what you charged the following month. The major difference is that secured cards require you to put down a cash deposit before you’re able to use the card. That way, if you struggle making payments, the creditor can use the cash you deposited to foot the bill.

Ask your parents to include you as an authorized user.

Only do this if your parents’ accounts are in good standing. The credit activity associated with the primary accountholders (your parents) will also be reported for any authorized users. This can be a good way to build a credit file to demonstrate you can handle credit on your own.

Most importantly: practice good credit habits.

Regardless of which method you use to get access to credit, make sure to practice good credit habits. That means this: always pay your bills on time and don’t max out your cards. In fact, you should keep your usage low and show you can pay off the balances month after month. Also, be careful applying for too many cards in a short period of time. Bottom line? When it comes to credit health, slow and steady wins the race.

Take the next step: protect your credit and start saving money.