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Step 1
Check your current credit bureau reports. This may sound like an odd step if you don’t have an established credit file but statistics have shown that approximately 75% of credit reports currently contain at least one error. This error could be that someone else’s data is being reported to your credit file. You can obtain a free copy of your credit report from the Annual Credit Report website (see Resources below).
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Step 2
Open a checking or savings account with a bank or credit union. Although a bank account doesn’t show up on your credit report (unless it is a negative entry), having a checking and/or savings account is the first step to building your credit. Additionally, lenders may be willing to give a loan interest rate discount for automatic payment sign up through a bank or credit union account.
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Step 3
Ask a family member that has a good credit history if you can be added as an authorized user to one of their credit card accounts. If you are added as an authorized user, the credit card account and subsequent history will be added to your credit bureau report. If your family member is concerned about giving you access to her account, you can reassure her that you do not actually need a credit card. By simply being added as an authorized user, you will begin to build your credit.
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Step 4
Apply for a low credit line credit card account. As long as you have a job, you should be able to qualify for a credit card account with a small credit line. The fees will be higher but this is your first foray into credit. If you are a college student, this is an even easier step. Credit card companies can usually be found on campus during the first few weeks of school offering incentives to sign up for one of their credit card accounts.
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Step 5
Look into applying for a secured credit card if you are unable to qualify for a standard or student credit card account. Secured credit cards are like a savings program. Features vary by company, but typically the consumer opens a savings account and the card’s credit line matches the savings account. In the event that you default on your credit card agreement, the financial institution has your savings account to use as collateral. You can find companies that offer secured credit cards on the CardTrak website (see Resources below).
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Step 6
Finance a vehicle. If you are working and need to purchase a vehicle, you can usually receive a loan as the car serves as collateral for the loan. Your interest rate will likely be quite high, but once you have an established credit file, you can refinance to a lower interest rate loan.
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Step 7
Pay your bills on time. Once you have established a few lines of credit it is imperative that you always pay your bills on time. As your payment history lengthens, your credit score will continue to climb.
