At a Glance

Establishing a good credit score for the first time is an essential step for anyone wanting to be financially responsible. One of the best ways to do this is to open up a line of credit that can be repaid in full, such as a small secured loan or a credit card. If done right, this will help build up your credit and show potential creditors that you are fiscally responsible.. Another option is to become an authorized user on someone else’s credit account, but this tactic requires extreme diligence in following their financial habits. Establishing a good foundation of financial responsibility and creating a positive relationship with creditors is key to setting yourself up for long-term success.

In this article, you’ll learn:


Around 45 million

adults in the U.S. are considered credit invisible, which means they don’t have a credit score.

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What is credit?

Credit is the ability to borrow money or obtain goods and services with the understanding that payment will be made at a later time. Credit allows individuals and businesses to make purchases they may not be able to afford upfront and pay for them over time, with interest.

When you use credit, you are essentially borrowing money from a lender, such as a bank or credit card company, with the expectation that you will repay the loan, with interest, over a set period of time. Credit can take many forms, including credit cards, loans, mortgages, and lines of credit.

Your credit history, income, debt-to-income ratio, and employment status determine your creditworthiness. A good credit history and a solid financial profile can make it easier to obtain credit at favorable terms, while a poor credit history and financial profile can make it more difficult to obtain credit or result in higher interest rates and fees.

It’s important to use credit responsibly and only take on debt that you can afford to repay. Paying your bills on time, keeping your credit balances low, and regularly monitoring your credit score and report can help ensure you maintain good credit health.

Tips to establish your credit

You don’t automatically start out with good credit–you have to work for it. Here are eight tips you can use to start establishing your credit.

1. Check and review your credit report

Establishing credit is an important step toward building a strong financial foundation. One important tip to establish credit is to check and review your credit report regularly. Doing so lets you identify any errors or inaccuracies in your report and take steps to correct them. Additionally, checking your credit report allows you to monitor your credit score and track your progress as you build your credit history. It’s recommended to review your credit report at least once a year and ensure that all information is up-to-date and accurate. This helps establish a positive credit history and can lead to better borrowing terms in the future.

Related: How to read a credit report?

2. Apply for a starter credit card

Another effective tip to establish credit is to apply for a starter credit card. Starter credit cards are designed for individuals with little or no credit history and typically have lower credit limits and higher interest rates. However, responsibly using a starter credit card, like paying off the balance in full each month, can help you build a positive credit history and improve your credit score. It’s important to choose a starter credit card that fits your needs and budget and to use it responsibly to avoid accumulating debt.

3. Use your credit card responsibly for a while

Using a credit card responsibly for a while is another important tip to establish credit. Responsible use of a credit card involves making payments on time and keeping your balance low. This demonstrates to lenders that you can handle credit responsibly, which can help build your credit history and improve your credit score. It’s also important to avoid opening too many credit accounts at once, as this can negatively impact your credit score. Instead, start with one or two credit accounts and use them responsibly over time.

4. Become an authorized user

Becoming an authorized user on someone else’s credit card is another helpful tip to establish credit. Being an authorized user means you have permission to use someone else’s credit card, and their credit history is reflected on your credit report. This can be a good option if you’re just starting to establish credit or have a limited credit history. It’s important to choose a credit card holder with a good credit history and who is responsible for their credit use. Additionally, it’s essential to communicate with the primary cardholder about how the card will be used and who will be responsible for making payments.

5. Set up a joint account or get a loan with a co-signer

Setting up a joint account or getting a loan with a co-signer is another useful tip to establish credit. When you open a joint account or take out a loan with a co-signer, both parties are responsible for making payments, and the credit history is reported for both individuals. This can be helpful if you’re just starting to establish credit or have a limited credit history. It’s important to choose a co-signer who has good credit and is willing to take on the responsibility of making payments if needed. Additionally, it’s important to communicate with your co-signer about the terms and conditions of the joint account or loan.

Learn more: Personal Loans with a Cosigner

6. Utilize a credit-builder loan

Utilizing a credit builder loan is another practical tip to establish credit. A credit builder loan is a small loan that’s designed to help individuals build or improve their credit score. Unlike a traditional loan, the money borrowed is held in a savings account until the loan is paid off, which helps demonstrate responsible credit use. By making on-time payments, the lender reports your payments to the credit bureaus, which can help improve your credit score over time. It’s important to choose a credit builder loan with a reputable lender and to make sure the lender reports to all three major credit bureaus.

7. Consider store credit cards

Store credit cards are typically easier to obtain than traditional credit cards and can be a good way to start building credit. However, it’s important to use store credit cards responsibly and pay off the balance in full each month to avoid accumulating high-interest debt. Additionally, it’s important to choose a store that you frequent often and offers valuable benefits, such as discounts or rewards.

8. Build and improve your credit

Building and improving your credit is an ongoing process that requires consistent effort and responsible credit use. Some tips for building and improving your credit include making timely payments, keeping your credit utilization low, and monitoring your credit report regularly. It’s also important to avoid opening too many credit accounts simultaneously, as this can negatively impact your credit score.
Additionally, paying off high-interest debt and keeping old credit accounts open can help improve your credit score.

Learn more: Build Credit and Improve Your Score

How to use credit once you have it

Once you have access to credit, it’s important to use it responsibly to maintain good credit health. Here are some tips on how to use credit once you have it:

  • Make timely payments: Paying your bills on time is one of the most important factors in maintaining good credit. Late payments can lower your credit score and lead to higher interest rates and fees.
  • Keep your balances low: Keeping your credit card balances low and paying them off in full each month can help you avoid high interest charges and fees. Keeping your credit utilization (the percentage of your available credit that you’re using) under 30% is generally recommended for good credit health.
  • Maintain a diverse credit mix: Having a mix of different types of credit, such as credit cards, installment loans, and mortgages, can help establish a diverse credit history and improve your credit score.
  • Regularly monitor your credit score and report: Checking your credit score and report regularly can help you detect errors, identify areas for improvement, and guard against identity theft and fraud.
  • Avoid applying for too much credit at once: Applying for multiple credit accounts within a short period of time can result in multiple inquiries on your credit report, which can lower your credit score.

Remember, credit can be a valuable tool for achieving financial goals, but it’s important to use it responsibly to avoid damaging your credit health. If you’re unsure about how to use credit responsibly or are struggling with debt, consider seeking the advice of a financial professional.


There are several ways you can monitor your credit:

  • Check your credit report: You can request a free copy of your credit report from each of the three major credit reporting agencies – Equifax, Experian, and TransUnion – once a year. You can request your credit report at
  • Sign up for credit monitoring services: Several credit monitoring services can help you keep track of changes to your credit report, such as new accounts or credit inquiries. Some popular credit monitoring services include Credit Karma, Identity Guard, and MyFICO.
  • Use credit score services: Many credit score services, like Credit Karma and MyFICO, offer credit monitoring as part of their package. They also provide regular updates of your credit score, which can help you track your overall credit health.
  • Set up fraud alerts: If you suspect that your credit has been compromised or you’re at risk of identity theft, you can set up fraud alerts with credit reporting agencies. This will alert you if someone tries to open a new account or apply for credit in your name.
  • Review credit card and bank statements: Regularly review your credit card and bank statements for unauthorized charges or suspicious activity. Contact your bank or credit card company immediately if you notice any suspicious activity.

The easiest and most straightforward way to establish credit is by obtaining a secured credit card. Secured cards require users to provide a deposit of cash, often equal to the limit on the card, as collateral. When users spend and pay off the balance on their cards on time, their payment history will be reported to major credit bureaus—helping to build up their credit score over time. As long as users make sure to stick to lower spending amounts and pay off the balance in full each month, they can use a secured credit card to jumpstart their journey in establishing an esteemed credit profile quickly and easily.

Building credit takes time, effort, and financial discipline. It takes anywhere from three to six months of good payment habits to begin seeing an impact on your credit score. Building a strong credit history can go even further, taking up to two years or more for optimal results. No matter how long it takes, the key is staying consistent with healthy credit practices like paying bills on time, only using a certain percentage of available credit limits, and avoiding debt whenever possible. Though building credit isn’t always the most inviting task at hand, taking the necessary steps to establish it provides long-term benefits in the form of higher credit scores and greater access to advantageous loan terms.

When you first establish credit, you generally start with no credit score. A credit score is a numerical representation of your creditworthiness based on information in your credit report. Since you have no credit history when you first start using credit, there is no information for the credit reporting agencies to use to calculate a credit score.

Once you start using credit, it can take several months for a credit score to be generated. The length of time it takes to establish a credit score can vary, depending on factors such as how quickly you start using credit, how often you make payments, and how long it takes for creditors to report your payment history to the credit bureaus.

Once you have established credit, your credit score can range from 300 to 850, with a higher score indicating better creditworthiness. Typically, a score of 670 or higher is considered good credit, while a score below 580 is considered poor credit. Keep in mind that credit score ranges can vary between lenders and credit scoring models, so it’s important to understand the credit score range being used in a specific situation.