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How to Establish Credit With No Credit History

Start small, use credit wisely, and monitor your progress regularly as you embark on your credit-building journey.

I wish I could tell you how credit is unnecessary. However, much of living in our society requires credit. Until that changes, you’ll need credit and this article will show you how to establish credit when you have no credit history.

If you’re just starting your financial journey and have no credit history, building credit can seem challenging. However, establishing credit is essential for accessing loans, renting apartments, buying a car, and more.

Fortunately, there are several strategies for starting to build credit from scratch.

1. Understand the Basics of Credit

Before diving into credit-building strategies, it’s crucial to understand the fundamentals of credit. Credit measures your ability to borrow money and repay it on time. Lenders use your credit history to assess the risk of lending to you.

Your credit score, a numerical representation of your creditworthiness, is based on factors such as payment history, credit utilization, length of credit history, types of credit accounts, and new credit inquiries.

2. Open a Secured Credit Card

One of the most common ways to establish credit with no credit history is by opening a secured credit card. Secured credit cards require a security deposit, which is collateral for the credit limit. Because the deposit minimizes risk for the issuer, secured cards are easier to qualify for than traditional unsecured cards.

Tip: Make small purchases with your secured card and pay off the balance in full each month to build a positive payment history.

3. Become an Authorized User

Another option for building credit is to become an authorized user on someone else’s credit card account. If you have a family member or close friend with a good credit history, ask them to add you as an authorized user to one of their credit cards.

As an authorized user, you’ll inherit the primary cardholder’s credit and payment history and credit utilization of that credit card. However, choosing someone who manages their credit responsibly is crucial, as any negative activity could harm your credit.

4. Apply for a Credit Builder Loan

Credit builder loans, also known as secured installment loans, are designed specifically to help individuals establish or improve their credit. With a credit builder loan, you borrow a small amount of money from a lender, typically deposited into a savings account or certificate of deposit (CD) that you can’t access until the loan is repaid. As you make on-time payments toward the loan, the lender reports your positive payment history to the credit bureaus, helping you build credit over time.

5. Consider Alternative Data

If you’re having trouble qualifying for traditional credit products, consider alternative data sources that can help you establish credit. Some lenders and credit scoring models take into account non-traditional data, such as rental payments, utility bills, and cell phone payments, to assess creditworthiness. Platforms like Experian Boost allow you to add utility and telecom payments to your credit file, potentially boosting your credit score.

6. Apply for a Student Credit Card

If you’re a student, you may be eligible for student credit cards designed for individuals with limited or no credit history. These cards often have more lenient approval criteria and may offer student-friendly perks and rewards. Look for student credit cards with no annual fees and low APRs, and use them responsibly to build credit while in school.

7. Use a Department or Retail Store Card

Another option for establishing credit is to apply for a department store or retail store credit card. These cards are often easier to qualify for than traditional credit cards and can help you build credit with responsible use. However, be cautious of high-interest rates and fees associated with store cards, and avoid carrying a balance to prevent accruing debt.

8. Consider a Secured Personal Loan

In addition to secured credit cards, you can consider applying for a secured personal loan to build credit. Similar to credit builder loans, secured personal loans require collateral, such as a savings account or CD, to secure the loan. Make timely payments on your secured personal loan to demonstrate responsible borrowing behavior and build a positive credit history.

9. Practice Responsible Credit Habits

Regardless of the credit-building method you choose, practicing responsible credit habits is key to establishing and maintaining good credit.

Pay your bills on time every month, keep your credit card balances low relative to your credit limits (ideally below 30%), avoid opening multiple new accounts at once, and monitor your credit regularly to check for errors or unauthorized activity.

Over time, these habits will help you build a solid credit history and achieve your financial goals.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of and His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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