Top 5 Ways To Build Your Credit

Building a good credit history is very important for every person. And, the sooner you are planning to take the plunge, the better will be the results. While you might think that a good credit score is required to take a loan or credit card, it may impact other areas of your life.

For example, landlords might check your credit history before approving your rental application. So, if you have made up your mind to build a good credit history from scratch but are confused about where to begin, don’t worry. Keep reading the post to learn about the top 5 ways to build your credit.


While a good credit score is the best way for lenders to evaluate your creditworthiness, you can build trust by following certain methods. And, opening a bank account is one of them. Bank accounts can prove that you have a deep understanding of financial responsibility.

Opening a bank account is a great way for young people to showcase that they are aware of financial transactions. And, this comes in handy when you are applying for your first loan as well. Information about your savings account isn’t included in any kind of credit report. But, lenders request for them sometimes.

Lenders need it for credit card and loan applications. Moreover, lenders are eager to know whether you are experienced in handling your money when it comes to depositing and withdrawing the same. Also, they can know that you are having a stable income.

Most of the biggest banks in the US provide checking accounts for free. It means, there are no minimum deposits or any kind of annual fees. However, keep in mind that a negative savings bank account will get reflected on your credit report. Hence, if you have a low balance and a check bounced, lenders will come to know about that.


Because credit reports are based on the amount of money that you have borrowed, the report doesn’t include information on whether or not you are paying your monthly rents and utility bills on time. So, bill payments aren’t used to evaluate the latest credit score, or otherwise called as FICO Score.

However, most people are unaware of the fact that FICO Score isn’t the only one available for potential borrowers. Other credit scoring institutions Consider rental and utility bill payments as one of the important criteria when it comes to creditworthiness. In recent times, even FICO has incorporated alternate data sources such as monthly rentals and bill payments to calculate creditworthiness.

The good thing is that many companies allow you to enter this information on the relevant space and the lending company gets to extract the details from there. These institutions play an important role in your journey to build a good credit history.

So, if you want to earn trustworthiness from these institutions, you have to continue paying your rent and other bill payments on time. Try to make it a habit and maintain it diligently. Also, keep the information updated to their system.


The biggest advantage of building a good credit history from nowhere is made easy sometimes. Many lending companies allow someone with a well-established credit history such as your friends, a close relative, or even your parents to become a co-signer with you for your credit application.

The benefits are many when you have a co-signer For your credit card application. The lender doesn’t have to go through the evaluation process of your thin credit history, and you can collect the credit ratings of your co-signer. Like other kinds of financial transactions, you have to make sure that you are doing the right thing.

First, look out if the co-signer has a good credit history. It is very important to do so, or else the whole purpose of building something good will end in smoke. Even if your best friend insists that you make them a co-sign, think about it twice. In the lender’s eyes, both of you are the same and share similar consequences.

Therefore, it is wise to stick with someone who has a demonstrated relationship with you. Family members with the same surname as yours could be the best choice in this situation. Moreover, the lender might suspect if you walk into the room with a stranger.

Both you and your co-signer must understand that from now on the repayments have to be done within the due time. And, it is the responsibility of both of you. For example, if your dad so-signs for this application, and there are hundreds of dollars in repayments that are late, both of your credit scores will go down.


It is another great way to get your feet wet in the world of credit building. Ordinary credit cards are called unsecured because there is no collateral associated with them. These credit cards allow you to utilize the money until the credit limit gets exhausted. And, the lender isn’t sure whether the payments will be received in time.

A secured credit card is connected to collateral and makes the credit safe. For example, if you have $500 in your bank, the secured credit card issued to you will be having $500 as a credit limit. Anything more than that, the transaction won’t be completed.

However, be careful because sometimes lenders might charge you more interest rates and fees compared to unsecured credit cards. Make sure that the lender reports to the credit bureaus on time.


Loans are one kind of installment credit because you repay the loan with interest in equal monthly payments. Some good examples are student loans, car loans, and mortgages. You can impress lenders if you have any one of them and maintaining them well.

For young people, a student loan might help them build a good credit history over time. Sometimes you don’t even have to pay until graduation. When you start to repay, it will build your credit history. Also, you can try for other installment loans if you know what you are doing.