Establishing good credit is essential for securing loans, renting apartments, or even getting better job offers. But if you’re just starting out, the process can seem confusing. Here’s how to begin building your credit the smart way.
Start with a secured credit card
A secured card requires a refundable deposit and works like a regular credit card. Use it for small purchases and pay off the balance in full each month to start creating a positive credit history.
Become an authorized user
Ask a family member or trusted friend to add you as an authorized user on their existing credit card. Their good payment history can boost your credit, but make sure they use the card responsibly.
Pay bills on time — always
Payment history makes up the largest portion of your credit score. Pay all your bills (rent, utilities, phone) on time, every time. Some services now let you report on-time rent payments to credit bureaus.
Keep credit utilization low
Try to use less than 30% of your available credit. For example, if your limit is $1,000, keep your balance below $300. This shows lenders you’re not over-reliant on credit.
Building credit takes time, but steady, responsible habits will set you on the path to financial freedom.