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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: mavo/Shutterstock.com March 14, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, found a battered copy of Your Money or Your Life at the public library. In addition to writing for Bankrate, her work has appeared on CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as writer and editor for The Billfold, a personal finance blog where people had honest conversations about money. Dieker also teaches writing, freelancing and publishing classes and works one-on-one with authors as a developmental editor and copyeditor. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Your credit score has a huge impact on your financial life. If you have good or excellent credit, you’ll benefit from reduced interest rates, better credit card rewards and more opportunities to use credit to build a strong financial foundation. If you have poor credit, you might have trouble taking out a credit card, renting an apartment or even finding a job—and if you are accepted for a line of credit, you’ll pay much higher interest rates on your debt. This is why understanding how to build credit is so important. Without credit, lenders can’t gauge how reliable you are at paying bills, which is why having can be just as bad as having . Everyone should learn how to build credit, whether you want to apply for some of the on the market or if you simply want to live without the baggage of a bad credit history. The good news is that building credit isn’t hard. There are many ways to build credit, so let’s take a look at some of the best tips, tricks and strategies to help you improve your credit history and increase your credit score. How to build credit with a credit card
Banks like to see that you can manage your money. Here’s a step-by-step guide to help you start developing a positive credit history. Sign up for the right type of credit card
When you’re ready to start , make sure you apply for the right type of card. If you’re trying to , consider one of the . If you have a car, fuel expenses are already a part of your spending—and help you use those purchases as a foundation for building credit. You could even build your credit score with a . Retail credit cards often come with high interest rates, but they’re available to people with less-than-perfect credit. That makes store cards a good starting point for people who want to improve their credit history. If your credit score is very low or your credit history is limited, you might want to consider applying for a . Secured cards require a deposit to obtain a line of credit. For example, a $500 credit limit typically requires a $500 deposit. Having to pay for a line of credit might seem like a hassle, but it’s an easy way to obtain credit in your own name. Once you build up a history of responsible use, most secured cards will return your deposit—and the best secured cards will also increase your credit limit, giving your credit score another boost. Become an authorized user
Becoming an on someone else’s credit account is a fast way to add information to your credit history. As an authorized user, you’ll be able to piggyback on someone else’s credit—which can be both a benefit and a challenge. If the person who has authorized you on their account uses credit responsibly, their good credit can help you boost your own credit history and score. However, if they have a negative credit history or begin treating their credit accounts irresponsibly, you might want to as any poor credit habits can affect your record, too. Before you become an authorized user on a credit card, check to see whether the lender reports authorized user data to the (Equifax, Experian and TransUnion). Not all lenders report authorized users to the credit bureaus, so make sure you’re becoming an authorized user on an account that can actually help your credit. Set up automatic credit card payments
One of the best ways to ensure you always pay your credit card bills on time is to sign up for . You can set up an automatic minimum payment, automatically pay the full statement balance or choose a fixed amount to put towards your credit cards every month. You’ll need to make sure there’s enough money in your bank account to cover your automatic payments, of course. But if you can get autopay set up on your credit card bills, you’ll be able to reap the benefit of a positive credit payment history without having to manually schedule payments each month. Open a second credit card
Once you’ve built up a positive credit history with your first credit card, it’s time to apply for a second credit card. Having under your name increases the amount of credit available to you—and if you can avoid running up high balances on your credit cards, you could lower your (which represents your current debt as a percentage of your available credit) and improve your credit score. Your credit utilization ratio is an important credit scoring factor, and experts suggest keeping your balances under 30 percent of your credit limits to help your scores. Plus, having more than one credit card gives you the opportunity to earn different . You might want a and a , for example, or a and a . Request a credit limit increase
One of the easiest ways to increase your credit score is by increasing your credit limit. If you on your existing credit cards, you might be able to get a slightly higher line of credit on each card. That extra credit can help your credit score grow, as long as you don’t turn your new credit into debt. How to build credit without a credit card
Make your rent and utility payments count
If you don’t have a credit card of your own yet—or if you want to —it’s time to leverage the power of your other monthly bills. If you rent, ask your property management company if it reports your payments to . If it doesn’t, you can sign up for a rent payment service that works in partnership with RentBureau and have your rental payment history reported. There are many ways to , so try to take advantage of at least one of them. You might also want to consider signing up for , a service that helps you boost your credit score by tracking your phone and utility payments. If you pay those bills on time every month, you could see an instant improvement in your FICO score. Read to learn more. Take out a personal loan
After you’ve been using credit cards for a while and making responsible on-time payments, you should have enough credit history to qualify for a small personal loan. Although this isn’t a quick fix— usually take six to 12 months to raise your credit score—it can diversify the types of credit on your credit report, and you can use your loan to prove you can consistently make payments on time. Learn more: How are credit scores calculated
More than you might realize. The FICO credit scoring model uses the following five factors to calculate your credit score: Payment history: 35 percent of your credit score is based on your payment record. Pay your bills on time every month to avoid lowering your newly established credit score. Credit utilization: 30 percent of your credit score is based on how much of your available credit you’re currently using—and less credit utilization is better. If you rack up debt or carry high balances, your credit score will suffer. Length of credit history: 15 percent of your credit score is based on length of credit history, which includes the age of your oldest credit account, the age of your newest account and the average age of all your accounts. This is why it’s a good idea to , even when you’re no longer using them regularly. Credit mix: 10 percent of your credit score is based on the types of credit accounts under your name. Having both , such as credit cards, and , such as car loans, can give your credit score a bump. But you can still build and maintain a good credit score even if you only have credit cards. Recent credit inquiries: 10 percent of your credit score comes from new credit. This includes the number of on your account. Each hard credit pull lowers your credit score slightly, so try to avoid applying for a lot of new credit over a short period of time. Want to build credit fast Practice good credit habits
While you’re establishing credit, it’s important to know how to build a positive credit history. Having a good credit score opens the door to lower interest rates and better opportunities for loans and credit in the future. Here are some good credit habits that can help you build credit more quickly: Pay bills on time: Since your payment history makes up 35 percent of your credit score, it’s important to pay your bills on time. If you , contact your credit card issuer and make up the payment before it is 30 days past due. Monitor your credit report: Keep a watchful eye on your credit report so you can monitor your financial habits and you find. It’s also a good idea to keep track of your credit score—there are many ways you can . Keep an eye on utilization: To boost your credit score as quickly as possible, try to keep your balances below 30 percent of your . If you have a credit card with a $1,000 credit limit, for example, that means keeping any revolving balance below $300—and it’s even better if you can pay your balance off in full every month. Don’t apply for too many new credit accounts at once: Applying for multiple credit accounts at once isn’t always a good idea. Not only will the back-to-back credit inquiries lower your credit score, but lenders might also turn you down simply because you’ve applied for within a short period of time. Avoid unnecessary credit inquiries: If you’re considering a new credit card, try not to waste credit inquiries on applications that aren’t likely to be accepted. Instead, look for credit options designed for people with your credit history and background. Keep old credit accounts open: Try to use each of your credit cards at least once per year to prevent lenders from . If you have an old credit card that charges an annual fee, consider to one with no annual fee—that way, you can keep the line of credit open and continue to build your credit history. The bottom line
Building your credit takes time, but the process often goes more quickly than people realize. If you start applying these credit-building tips and strategies today, you could see an improvement in your credit score within months. Continue to practice responsible credit habits, and you can look forward to higher credit limits, lower interest rates, better credit card rewards and all of the other financial benefits that come with building good credit. SHARE: Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, found a battered copy of Your Money or Your Life at the public library. In addition to writing for Bankrate, her work has appeared on CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as writer and editor for The Billfold, a personal finance blog where people had honest conversations about money. Dieker also teaches writing, freelancing and publishing classes and works one-on-one with authors as a developmental editor and copyeditor. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Related Articles