Your credit score will be with you your whole life and can affect everything from the car you drive to where you live. You may be wondering how to build your credit as a new consumer or improve your credit after it has taken a hit. Thankfully, there are ways to quickly and effectively build your credit history and boost your credit score.

What Is A Credit Score?

A credit score functions as an indicator of your financial trustworthiness. The higher the score, the better the likelihood that you’ll be able to repay your debts to any potential lenders. Most lenders prefer to see a credit score of at least 620 before extending credit. 

Your credit score also affects things like loan repayment terms and interest rates. Without good credit, it can be difficult to buy a house or a car.

How Do Credit Agencies Work?

There are three major credit bureaus (Equifax, Experian, and TransUnion) that collect and store your personal financial data to assist lenders with making credit decisions. These databases use your information to formulate a credit score, which helps determine if you will be approved for credit. The credit bureaus only gather and sell your data — they’re not part of the decision process. 

Consumers are entitled to obtain and review a free copy of their report from each bureau once per year.

Strategies to Build Your Credit 

By following one or more of the steps below, you will be well on your way to building or re-establishing a positive credit rating. While there is no exact formula to building perfect credit, combining these strategies below will have the greatest impact on your credit score and overall financial health.

Get a secured credit card

Secured credit cards are the easiest way to quickly build new credit. They are designed specifically for consumers looking to boost their credit score or re-establish credit after a bankruptcy or other negative action. 

Secured credit cards work by requiring you to put a certain amount down as a deposit — usually a few hundred dollars —that you will then borrow against as you make charges to your card and pay it off monthly. This deposit ensures that the bank will always have a way to get their money back if a borrower defaults on the payments. 

Once you’ve used a secured card to successfully establish credit, you can receive back your funds when you close or convert the card.

Become an authorized user

If there is an eligible person in your household (like a spouse or a parent) for you to piggyback off of, this is one of the easiest ways to establish new credit. Once you have been added as an authorized user to your loved one's account, their payment activity will also be reported to the credit bureaus in your name.

Get a secured loan

Also known as credit builder loans, these loans function to help you establish a credit history. 

Secured loans may be secured with an asset such as a vehicle or property, or with cash. Credit builder loans usually come in small amounts of less than $1,000 and work in a similar way to a secured credit card. Your money will be deposited into a savings account and released to you once you have made all of the payments. These satisfactory payments are then reported to the credit bureaus to help boost your score. 

Secured loans must be exercised with caution, particularly if you are putting down an asset that you already own as collateral, such as a vehicle. Only take out a secured loan when you have a solid understanding of how they work and are fairly certain you can meet the repayment terms.

Get a cosigner

When you need to obtain financing, such as for a vehicle, many lenders offer the option of having a cosigner who will share equal responsibility for the debt. In the event of a cosigner, payment activity will appear on both credit reports. 

Asking a family member, such as a parent or a spouse, to help you obtain a loan through cosigning is a great way to start to build your credit. Just be sure that you can afford to make the payments, or your actions can hurt their credit score too.


Improving your credit score is more than just opening up credit cards. The various types of accounts you have, the better your creditworthiness looks to potential lenders. 

When you obtain installment financing such as student loans, an auto loan, or a mortgage, your overall credit profile becomes more appealing in the eyes of lenders and others.

Maintain healthy credit habits

Consistently following healthy credit habits such as paying off your lines of credit early or on time, not maxing out your cards, and keeping your accounts open for as long as possible is the best way to build and maintain a good credit score over time. 

If you don’t focus on keeping up with your finances, you can quickly bottom out your credit score. On the other hand, positive actions performed consistently over time will have you well on your way to establishing a 700+ credit score. 

Nurturing Your Credit With Healthy Habits

The financial needs of every consumer are different, and it’s important to establish your credit with the right financial mindset. Understanding when to use debit cards and credit cards is a big part of practicing healthy financial habits. Click below to learn more. 

Credit Cards vs. Debit Cards