How to Build Credit
6 Min Read | Last updated: January 7, 2025
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Learn how to build credit, including strategies for establishing credit if you don’t have a credit history and tips to help you build credit over time.
At-A-Glance
- Having good credit may offer a number of benefits and can help to make you eligible for certain credit cards and loans.
- Building good credit can take time, but there are steps that can help you build your credit as efficiently as possible.
- Some of the best ways to build credit may include getting a credit card and using it wisely, paying down balances, and managing your credit utilization ratio.
In this article, we’ll look at the benefits of having good credit and tips for building or establishing your credit. From paying your credit card bills on time to maintaining a low credit utilization ratio, there’s a lot that you can do to build credit over time.
Why Should You Build Credit?
Having good credit can offer a number of benefits. An established credit history can help open opportunities for financing, and in some cases, could make you eligible for better lending terms, including in some cases, lower interest rates.
Here’s a look at a few situations where strong credit could benefit you:
- When Applying for Credit
Strong credit can give you access to certain loans and credit cards, sometimes with more favorable terms and interest rates.
- When Applying for a Mortgage
Having strong credit may also give you access to a mortgage with better terms and interest rates, which could represent significant savings over time.
- When Applying for a Rental
As part of the application process for renting a home, landlords may run a credit check on applicants. Having strong credit can make it easier to get approved for a rental.
- When Applying for a Job
Some employers check credit histories as part of their hiring process, especially for positions that involve financial responsibility.
7 Steps to Build Credit
There can be a number of different ways that you can establish or build your credit. Here’s a look at some of them now:
1. Check Your Credit Report
Many people don’t know where their credit score currently stands. If you’re looking to build credit, it may be important to find out what your credit looks like now.
In the U.S., there are three major credit reporting companies: Experian®, Equifax®, and TransUnion®, and you may be entitled to a free report from each once a year. You can request a report from AnnualCreditReport.com.
You can also monitor your credit with American Express® MyCredit Guide. MyCredit Guide is a free service that allows you to view your FICO® Score and Experian® credit report. (FICO is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.) Once you enroll with MyCredit Guide, your credit score and credit report will be available for free to view at any time. You’ll also have access to tools like FICO® Score Simulator and FICO® Score Planner to help you build positive credit habits that support a healthy credit score.
2. Clean Up Your Credit Report
Next, review your credit report carefully. Credit reports may not be infallible, so you may want to look for debts that are not yours, outstanding balances that you believe were paid, and other errors. You can dispute anything that you believe is incorrect. But be aware that open (unresolved) disputes can work against you when applying for a mortgage.
3. Consider Getting a Credit Card
Having a credit card and using it wisely could help you to build your credit. That’s because, with a credit card, you may be able to demonstrate how well you’re able to manage credit, something that can impact your credit scores and reports. If you’re unable to qualify for a traditional credit card, you could consider applying for a secured card.
4. Make Credit Card Payments On Time
Once you have a credit card, you may want to make sure you practice good credit habits, such as making all of your payments on time. You may also want to consider paying the balances off in full each month if you’re able.
5. Pay Off Debt
If you already have a credit card (or multiple cards) with balances, you may want to focus on paying those off. Otherwise, your credit report may consistently show you at your credit limit, which could negatively impact your score.
6. Manage Your Credit Utilization Ratio
The portion of your available credit that you’re using is called your “credit utilization ratio,” and it can impact your credit score. According to FICO, maintaining a low credit utilization ratio can positively affect your credit. One way to do this may be by using a low percentage of your available credit limit on revolving accounts, like credit cards. Alternatively, you can focus on paying your card balances more often than once a month.
Finally, you may consider asking your credit card issuer for a credit limit increase. A higher credit limit could make your credit utilization ratio lower as you may be using a lower percentage of your total available credit.
7. Get Credit for More of What You’re Paying
Originally, only borrowing and repaying what was borrowed could help your credit. Some services can give you credit for other bills you pay, including rent and utilities. Experian Boost is one of those services that could help you to improve your credit score, and fast.1
Frequently Asked Questions
A good credit score may vary, depending on the credit scoring model that’s being used. According to FICO, a good score falls between 670 and 739, while very good credit scores fall between 740 and 799. Meanwhile, exceptional credit is 800 to 850.2
Building strong credit can take time. If you’re just starting out, you may need to have at least one credit account open and reporting to the major credit bureaus for at least six months in order to generate a FICO score.3
While building credit may take time, you can help speed things along by ensuring that you are practicing good credit habits. These could include making your credit card payments on time and maintaining a low credit utilization ratio. You can also try opting for a program like Experian Boost, which could help to boost your score quickly.4
The Takeaway
Building strong credit can take time, but by being proactive, you can give yourself the best chance of building your credit. With good credit habits including paying your credit card bills on time, and maintaining a low credit utilization ratio, you can take steps toward building strong credit over time.
1,4 “Does Experian Boost Work?,” Experian
2 “What is a Credit Score?,” MyFICO
3 “How Long Does It Take to Build Credit?,” Experian
Allan Halcrow is a freelance writer concentrating in business, human resources, and diversity and inclusion. He is also the author of four books on management.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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