To build credit, open one account that reports to the credit bureaus, such as a secured card, a credit-builder loan or an authorized-user spot. Then pay on time every month and keep card balances under 30% of the limit, and under 10% if you can. After about six months, you will usually have a FICO Score.
That is the whole method. The hard part is the first account, because lenders want a history before they give you one. Below: how a score gets created, which starter tool fits you, a month-by-month plan for year one, and the special rules if you are under 21.
How do you get a credit score in the first place?
You do not start at zero or 300. You start with no score at all. A score appears only once your credit report holds enough data. FICO, the score most lenders use, needs all three of these (myFICO):
- At least one account that has been open for six months or more.
- At least one account reported to the bureau within the past six months.
- No "deceased" flag on the report.
One account can meet all three. VantageScore 4.0 is faster: it can produce a score with as little as one month of history (Equifax). That is why a free app may show you a score months before a lender can pull a FICO Score.
You are not alone if you are starting from nothing. The CFPB estimates that 7.0 million adults (2.7%) had no credit record at all in December 2020, and another 9.8% had a record too thin or too old to score (CFPB, June 2025).
How do you build credit from scratch? 6 steps
- Check your reports first. Get them free from Equifax, Experian and TransUnion every week at AnnualCreditReport.com. The weekly access is now permanent (FTC). You want to confirm there is no file in your name you did not open.
- Open one starter account that reports. Ask the lender whether it reports to all three bureaus. If it does not report, it does not build credit.
- Pay on time, every time. Payment history is 35% of a FICO Score. A payment is generally reported late once it is 30 days past due, and the mark can stay for seven years (Experian). Set up autopay on day one.
- Keep utilization low. The CFPB says many experts recommend using less than 30% of your limit, and the highest scorers often use under 10% (CFPB). The balance that counts is the one on your statement, so a card paid in full can still report a balance (myFICO).
- Apply sparingly. For most people, one new inquiry costs less than five FICO points. Inquiries stay on your report for two years but count for one (myFICO). Several applications at once look riskier.
- Keep your first account open. Its age keeps working for you. Closing it also cuts your available credit, which pushes utilization up.
- Credit limit (equal to the deposit)
- $300
- 30% ceiling
- $90
- 10% target
- $30
- Monthly phone bill charged to the card
- $25
- Utilization on the statement ($25 ÷ $300)
- 8%
- Interest paid when the statement is paid in full
- $0
What is the best way to build credit? Compare the tools
There is no single best tool. The best one is the one you can pay on time without strain. This table compares the main options.
| Tool | Typical cost | How it reports | Main risk |
|---|---|---|---|
| Secured credit card | Refundable deposit, often a few hundred dollars; some charge an annual fee | As a credit card (revolving), if the issuer reports | Interest if you carry a balance; late fees |
| Student or starter card | Often no deposit; check the fees | As a credit card | Higher APR; under 21 you need income or a co-signer |
| Credit-builder loan | Interest and fees on $300–$1,000, over 6–24 months | As an installment loan to all three bureaus (CFPB) | Late payments hurt; money is locked until you repay |
| Authorized user | Usually free | On your report only if the issuer reports AU accounts | The owner's high balance shows on your report |
| Retail store card | No deposit; check the APR | As a credit card | Low limits make high utilization easy |
| Rent or utility reporting | $0 to about $10 a month, sometimes a setup fee | Only at the bureaus the service reports to | May not appear in the score your lender uses |
Secured credit cards
You put down a deposit and it usually becomes your credit limit (myFICO). The deposit is not used to pay your bill. Many secured cards "graduate" to a regular card after a run of on-time payments, and you get the deposit back. The CFPB's guide put typical deposits at $50 to $300, though that brochure dates from 2016.
Credit-builder loans
Usually offered by credit unions. The lender puts the loan amount in a locked savings account. You make monthly payments, and you get the money (minus interest and fees) when the loan ends or as you pay. The CFPB's study found these loans helped most when people had no other debt: scores rose by up to 60 points on average. But about 40% of borrowers made at least one late payment, and people already carrying debt saw scores dip slightly (CFPB, 2020).
Becoming an authorized user
A parent or partner adds you to their card. You are not liable for the bill. The account helps you only if the issuer reports authorized users, and only at the bureaus it reports to. The owner's high balances can appear on your report too (Experian). myFICO says this route has a smaller effect than an account in your own name.
Rent and utility reporting
Landlords do not have to report rent. When rent is reported, FICO says its newer scores (FICO 9, 10 and 10T) count it, but the FICO versions used for mortgages do not (myFICO). Experian Boost is a free Experian service that adds eligible phone, utility, internet, insurance and some rent payments to your Experian file only. Experian says results vary and some users see no change (Experian). Treat these as add-ons, not your main account.
What should you do in your first 12 months?
This plan assumes you are starting with no credit file. Adjust the timing to your situation.
| When | What to do | Why |
|---|---|---|
| Before you apply | Pull all three reports. Pick one starter tool you can afford. | Catch errors or fraud; avoid stacking applications |
| Month 1 | Open the account. Turn on autopay. Put one small bill on it. | Starts the six-month FICO clock |
| Months 2–5 | Pay the statement in full. Keep the statement balance under 10%. Apply for nothing else. | Builds a clean payment record |
| Month 6 | Check for your first FICO Score through your bank or card issuer. | You should now meet FICO's minimum criteria |
| Months 7–9 | Add a second type of account only if it fits your budget, such as a credit-builder loan next to a card. | Credit mix is 10% of a FICO Score |
| Months 10–12 | Review all three reports again. Ask about graduating from a secured card or a higher limit. | A higher limit lowers utilization; the deposit comes back |
| Month 12+ | Keep the first account open and keep paying on time. | Account age keeps rising |
How long does it take to build credit?
Expect at least six months to get a FICO Score. A VantageScore can show up within a month or so. Getting from a first score to a "good" one has no official timeline. Experian says reaching good credit can take a year or more, depending on your habits (Experian).
On FICO's scale, 670 and up counts as good. See what each tier gets you in our guide to what a good credit score is, and how you compare in average credit scores by age. Already have a score and want it higher? Read how to raise your credit score fast.
How do you build credit at 18 or under 21?
You can apply for a card in your own name at 18. But the Credit CARD Act adds a rule for anyone under 21. Under Regulation Z, an issuer can open a card account only if you show an independent ability to make the minimum payments, or a co-signer aged 21 or older agrees to pay (12 CFR 1026.51(b)). A parent's income does not count unless the parent signs on.
Good routes for young adults:
- Authorized user on a parent's card. Issuers set their own minimum ages, and some do not report until you turn 18.
- A student or secured card backed by your own income from a job. Count your take-home pay, not your gross pay, when you budget.
- Student loans. On-time payments build history like any other installment loan.
What mistakes slow down credit building?
- Carrying a balance "to build credit." It costs interest and does nothing extra for your score.
- Opening several cards at once. Each application is a hard inquiry, and new accounts lower your average age.
- Maxing out a small limit. On a $300 card, a $250 balance is 83% utilization.
- Forgetting a credit-builder loan payment. It is the most common way these loans backfire.
- Co-signing for someone else too early. You are on the hook for their payments, and their late payment lands on your report.
The bottom line
Start with one account you can pay in full, put it on autopay and leave it alone for six months. That alone gets most people a FICO Score. Add a second type of account only when your budget can carry it. Building credit is slow on purpose; consistency beats any shortcut.
