Best Ways to Build Credit for the First Time

Are you a newbie who wants to build a nice credit rating but knows nothing about where to get started? Luckily, you’re in the right place, because this special guide of ours has helped thousands of new people already to get a great credit score. But as there are too many prerequisites involved, we want you to start right away with our plan.

Once you will go out to sign up for a loan, you will be asked for your credit history, but wait, what? How is that possible for someone to have a credit history when it’s their first time applying for some credit. Well, that’s the ultimate catch here. This reverse causality of no credit card, no history and no credit history, no credit card is a dilemma that we will help you get out of.

If you feel like panicking, it’s all right, but we would suggest you not to do that, because we have a foolproof plan. Students or people who want to apply for an auto loan can build their credit history, but it all needs to be done from scratch. So here are the best ways to build credit.

Build some credit, even if you don’t need to

I know people who graduated from college without any student loans, credit cards or a car loan—paying cash seemed to have worked fine for them and they had no reason to get a credit. Well, that’s a nice idea if you never plan on having any debt, but if you do, you will be required to have a credit rating and previous track record of payment. The older you will get, the more you will feel the need to have some credit, maybe for a house loan or for having a nice vacation in Hawaii. But if you haven’t used your twenties to work up any credit score, you can still build up some debt, pay it, and have a good score.

If you ever plan on getting a title loan in Las Vegas, it’s pertinent that you start with a good credit score only, because on average, people with good credit rating can save over $100,000 during their life time, when compared with people with just average scores.

It usually takes several years to build a good credit score, and it will take even more, no less than 10 years to build an excellent credit rating. So if you have already planned up a mortgage in 10 years, it’s time you start now on your credit score.

A good credit score isn’t just necessary for a loan, it’s also used for other purposes too, like for calculating car insurance premiums, processing your apartment rental application, and even for employment screening. Well, if you have missed out on a few good job opportunities, just because you paid some bills late, I will be telling you to build a good credit score in just 2 years. Here is what you need to do, but before that, these are a few things that you should know.

  • Your credit reports are created by credit bureaus who keep databases of virtually everyone’s credit history. This collected information is used and sold to landlord, banks, employers, etc.
  • There are three credit bureaus you should know about: Experian, Equifax, and TransUnion, and while these all three aforementioned companies may collect the same information, chances of discrepancies still exist. Therefore, always check your credit reports at least once a year. But who reports to credit bureaus? They usually include major credit card companies, installment loan accounts, and store credit cards.
  • Information that doesn’t get reported to credit bureau includes your debit cards, and utility bills.

And now, the two important hacks to build your credit rating quickly

  1. Get a starter credit card

Unlike other credit cards that are designed for new people, get a starter credit card. These credit cards have lower credit limits, higher interest rates, annual fee and limited or no rewards. And then there are secured credit cards that require a collateral equal to your credit line, i.e. if you want to spend $500 on your credit card, you must have at least $500 in your bank account so it won’t leave you wondering what is a cash advance. It’s not similar to a debit card where all the payments are effectively deducted from your bank account the moment you make a purchase. For a secured credit card, those $500 will stay with you. It’s true that secured credit cards are similar to debit cards in terms of functionality, but they work differently and report your payments to credit bureaus, that means, you will be building up your credit rating even from petty payments and grocery shopping.

  1. Get a loan with some help from a cosigner

This could be the easiest way for you to build a credit score for the first time, so all you have to do is to setup a loan account with a cosigner who has a good credit rating. And if you don’t know what a cosigner is—it’s simply a person who will take responsibility of your loan payments, in case you fail to provide them.

In most cases, your application for a loan will be approved even if you are a newbie, but a cosigner with a good credit rating is necessary. In order to find a cosigner with a good credit rating, find a person:

  • Find a person who trusts you and will be willing to take this responsibility, and
  • has a good credit rating themselves


No matter what route you take to get good credit, it all gets down to the timely payments. So be careful and pay on time, once you have your credit card set up.