How to Build Your Credit from Scratch - Credit Cards Can Help
5 Min Read | Last updated: June 16, 2025
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
So, you have no credit history? See how to build your credit from scratch and the best credit cards to build credit to help you improve your score over time.
At-A-Glance
- Two main things are required to build credit from scratch: payment history and time.
- You can use credit cards to build credit, along with loans and ‘alternative data’ sources such as utility and rental payments.
- Secured credit cards and becoming an authorized user can be good options for building credit if you’re just starting out or have a limited credit history.
Whether you’re a college student just beginning to build your financial profile or a new resident trying to establish credit in the U.S., ultimately, you need to prove to lenders that you can handle your financial obligations. The best way to do that is to consistently make your credit card, loan, or other payments on time. And to build up good credit from scratch, you’ll want to focus on payments that are tracked by the three major credit-report bureaus: Experian®, Equifax®, and TransUnion®.
How to Start Building Credit
If you’re starting to build credit from scratch, you have several options:
- Get a Standard Credit Card
One option is a credit card in your own name that isn’t tied to any collateral. You may qualify for a card with a low credit limit if you’re a student, a credit union member, or have an established banking history, such as a checking account that you’ve had for many years and haven’t overdrawn.1 Choose a credit card that can reward you for your spending habits, whether that’s a card that offers travel rewards or cash back. - Get a Secured Credit Card
Secured credit cards may be easier to qualify for if you’re still building your credit. With a secured card, you can deposit the equivalent of your credit limit with the card issuer upfront. It’s low risk for the lender because if you default on your payments, it can keep your deposit.2 - Become an Authorized User
If someone you know already has established credit, you may be able to build your credit by becoming an additional card member on their account. Think carefully about this option – as your credit behavior, as well as the account holder’s, may affect both of your credit scores.3 - Find a Cosigner
Lenders may be more likely to approve you for a credit card or loan if a cosigner with good credit agrees to accept responsibility for your debt should you default. - Get a Credit-Builder Loan
These loans are designed specifically to help people build credit but are farther down the list because you may not be able to access the money until after you’ve repaid it. The lender puts the borrowed money into a special account, where it stays until you’ve made all the payments. Those payments are reported to the credit reporting agencies and help build your credit.4
Best Credit Cards to Build Credit
With responsible use, a credit card could help you to build credit over time. But the best credit card to build credit may be different for different people. A retailer card, becoming an authorized user on an existing card, or a secured card could all be viable options for building your credit.
- Retailer Credit Cards
If you’re just starting out, it may be easier to get approved for a retailer’s store credit card than for a general credit card, though retailer cards may charge high interest and have low credit limits.5 - Becoming an Additional Card Member
You can also be designated an authorized user or additional card member on someone else’s card. In that case, the owner of the card you’re authorized to use may be responsible if you don’t pay your charges.6 If you’re an authorized user of another person’s credit card, his or her payment habits can affect your score, too.7 - Secured Credit Cards
Another option is a secured card, which requires you to make a security deposit equivalent to the credit limit you’re given. Be sure that the secured card issuer reports to the credit agencies. After several months, your card issuer may review your account to see if you qualify to convert your secured card to an unsecured or traditional credit card.8
Build Credit With a Loan in Your Own Name
Another way to build credit from scratch is to take out a loan, but this may only make sense if you actually need the money to finance a purchase, like an education or a vehicle. Student loans are one option, but only if you’re a student, of course. Auto loans are another option. Some car dealers offer programs for recent or upcoming college graduates, allowing them to qualify for a loan for which they otherwise might not be eligible.
If you aren’t able to get a loan on your own, you may consider getting a cosigner. But as with credit cards, loan cosigners will be liable for the debt if you’re unable to make the payments.9
When you’re building credit from scratch, another option is a credit builder loan. After you’re approved for such a loan, you make payments into a savings account that a financial institution sets up for you. You make monthly payments (plus interest) until you’ve paid the entire amount of the loan, at which point you get access to the funds. Because these loans exist to help consumers build credit, your payments will show on your credit report. These kinds of loans may be offered by small community banks, credit unions, and online lenders.10
Consider Leveraging ‘Alternative Data’
In addition to using a credit card to help build credit and/or consistently paying down a loan, you may be able to build your credit by leveraging payments you’re already making.
For example, new DIY credit reporting services allow individuals to leverage “alternative data” like utility payments and cell phone payments by linking banking account activity to their credit reports. These options can be useful for individuals who have no credit history or a thin credit file.11 What’s more, each major credit bureau has announced plans to allow buy now, pay later payments to be listed in their consumer credit files.12 This could also help individuals build their credit.
Whichever path you choose, it may take at least six months to begin establishing your credit.13 But building credit is a long game: the longer your history (assuming you maintain good credit habits like paying on time), the higher your credit score may grow over time; ultimately making it easier to get the financing you need when you need it and at more favorable terms.
Frequently Asked Questions
Building a credit score takes time, but practicing good credit management may help you improve your score. Paying bills on time, keeping credit utilization low, and only applying for the credit you need may help improve your score.
Activity on credit and loan accounts may impact your credit score. That includes credit cards, student loans, auto loans, mortgages, and more. You may choose to report utility bills or cell phone bills to creditors using third-party programs.
How long it takes to build a 700 credit score can depend on several factors, like your credit history, current credit score, types of credit you have access to, and the length of time you’ve been using credit. Practicing good financial management, like paying bills on time and keeping your credit utilization low, may help improve your score over time.
The Takeaway
To build credit from scratch, you’ll need to establish a payment history that shows on your credit report and maintain it for at least six months. It may be the best to use credit cards to build credit, but two other options are also available: loans and alternative data sources such as utility and rental payments.
1 “How Is a Student Credit Card Different From a Regular Credit Card?,” Experian
2 “How Secured Credit Card Deposits Work,” Experian
3 “What Is an Authorized User on a Credit Card?,” Equifax
4 “What Is a Credit Builder Loan?,” Experian
5 “Are retail credit cards worth it?,” Bankrate
6 “What Rights Do You Have as an Authorized User on a Credit Card?,” Experian
7 “Will Being an Authorized User Help My Credit?,” Experian
8 “How to Upgrade a Secured Credit Card to an Unsecured Card,” Experian
9 “Cosigning a Loan FAQs,” Federal Trade Commission
10 “How to Get a Credit-Builder Loan,” Experian
11 “FACT SHEET: National Strategy for Financial Inclusion in the United States,” U.S. Department of the Treasury
12 “Retail Lending: Risk Management of 'Buy Now, Pay Later' Lending,” Office of the Comptroller of the Currency
13 “How Do I Go About Building My Credit History?,” myFICO
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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