Building credit from the ground up doesn’t happen overnight, but it’s not that daunting of a task once you know what lies ahead. After all, having an established credit history will help you get approved for things like a credit card, car loan, and eventually, a mortgage. While we’ve covered ways to improve your credit score, this post will provide you with tips to build credit when you have no credit history.

Get a secured card.
A secured card is like a traditional credit card, except it’s backed by an upfront deposit you make—usually around $200 or so—which you will get back when you close the account. You can use it just like any other credit card, but it usually has a modest credit limit. Its purpose is to build your credit enough to qualify for an unsecured card, which will likely give you a higher credit limit and better benefits.

Become an authorized user.
Here, a family member or friend would add you to their existing credit card, which will allow you to establish your own credit under their account. Since the primary card holder is responsible for all payments, make sure you choose a trustworthy person who carries a low balance and always pays on time. It’s a smart idea to have an open conversation with the account owner. Get a feel of their spending habits and come to an understanding of how you’ll use the card once you receive account access.

Apply for a store credit card.
There’s a good chance you’ve been offered a store card when checking out at a retail or department store. While these cards have high interest rates and typically limit your use of it to only that store, they can be effective in building credit and are easier to qualify for than a traditional credit card. If you decided to take this route, be sure you pay it off in full before the end of the payment period or else your credit score will likely be negatively impacted.

Get credit for paying utility and cell phone bills.
Tools like Experian Boost™ allow you to get credit for paying monthly utility, cell phone, and certain streaming service bills on time. This can help you to build credit without using a credit card. Keep in mind: not all lenders will consider tools such as Experian Boost™ when analyzing your credit.

Consider a credit builder loan.
Sounds pretty self-explanatory, right? These loans are offered by credit unions and banks, and once approved for the loan, the amount you borrow is held in an account while you make payments. Typically, you can’t access the money until you have repaid the loan, which means you are able to build savings and your credit at the same time.

For any questions related to how your credit can impact your ability to obtain a mortgage, get in touch with one of our Loan Officers today.