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How to Build Credit from Scratch
TayTalksMoney: Money, Lifestyle and Productivity

How to Build Credit from Scratch


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(Last Updated On: January 2, 2019)


Think it’s hard to build credit from scratch? Think again! When you build credit from scratch, it’s actually easier to do than to fix bad credit. Here are 5 easy ways to do it.



Get A Secured Credit Card

One of the best ways to build credit from scratch is to get a secured credit card. But what is a secured credit card? It’s basically described as a credit card where you deposit cash collateral and then use that as credit. So, if you put $500 on a secured credit card, you can then use up to $500 on the card and pay it off.

Just about anyone is approved for a secured credit card, mainly because you’re using your own money to have one. However, each bank and credit union is different in their terms and minimum deposit, so make sure you ask yours what they require.

Remember, the money on the secured card is yours, however, the bank still has the right to charge you interest rates on the money you spend on the card. So, make sure you pay your bill off each month, on time. Plus, this increasing your credit score as well because it’s showing you’re responsible with money!


Loan Yourself Money

If your bank or credit union aren’t willing to help you build credit from scratch, no worries. You can lend yourself money. If you have a decent savings account, using a credit-builder or self-lending loan can help you build credit without having to go through the hassle of getting approved.

So how does it work? Loaning yourself money is about the same as getting a secured credit card. First, you put some money up front, let’s say $500, into an account, and it then acts as a loan. Then, you receive your “terms”. It may be that for the next 6-18 months you pay the $500 back to yourself. However, since the transactions are going through a lender, you get the credit of paying off a loan. So, you’re boosting your score without actually every “borrowing” money from someone else. Self Lender is an example of a company that can help you do something like this.


Get A Co-Signer

If your parents, a family member, or a good friend are on board, you can always get a co-signer on a loan. It could be anything from a car loan to a personal loan. However, be smart about this. If you miss a payment or default on this loan, it doesn’t just affect you, it affects your co-signer too. Some people don’t want to take the chance of putting their credit score in someone else’s hands, but you may get lucky and get a co-signer that is willing to help you build credit from scratch.


Try A Personal Loan

If your bank or credit union allow you to, try getting a personal loan for a small amount of money. Pay your bill on time, every month, and pay off the loan as quickly as possible. Keep in mind that personal loans tend to have higher interest rates, and you don’t want to spend thousands when you only borrowed hundreds. However, personal loans are some of the easiest to secure, especially when trying to build credit from scratch.


Use Store Credit Cards

If you visit a store often and trust yourself not to overspend or get into massive amounts of debt, you can always apply for a store credit card. Just like personal loans, interest rates on store credit cards can be higher than most, so remember to pay your bills on time and in full every month. However, store credit cards are fairly easy to secure and will allow you to shop at your favorite place while building your credit. Plus, some have extra perks, like cash back or extra items, so that’s more money back into your pocket!

When you build your credit from scratch, you’re giving yourself the opportunity to build your credit the right way. These 5 ways can help you build your credit quickly and easily, while also keeping you in check. Be smart and be safe, especially with money borrowed, but also don’t be afraid to build your credit.

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