How to Build Credit

build credit

If you have ever thought about buying a house or owning a car, you need to make sure your credit score agrees with you. You cannot take out a loan without having some form of credit, but you will not get approved for a credit card unless you have a good credit history. It is a complicated concept, but there are ways you can begin building your credit from scratch.

Authorized User

One of the first ways you can build credit requires no work on your part. A family member with good credit can add you as an authorized user to their account. As an authorized user you receive your own credit card, but it is connected to the main person’s account. You do not even need to use the card to begin building your credit. However, you should be careful because if they miss or make late payments, that can negatively affect your credit score too.

Credit Cards

If there is no one you can trust to connect to their account, you might want to get a credit card on your own. There are a few credit card options that might be ideal for just starting. One of the most common types of credit cards for beginners is a secured credit card. A secured credit card requires you to put a security deposit that you will get back after you close the account unless you still owe money. Student cards and retail credit cards are also easy options to begin your credit journey. Every card has different requirements, but you should avoid cards that charge an annual fee, make you pay interest, and require you to have a balance to build credit.


If you want to avoid credit cards, taking out a loan may be a good option. It is not highly recommended to borrow money only to build credit, but if you are already taking out a student loan or making a large purchase, it may not be a bad idea to use it to your advantage. Student loans get reported to the three credit bureaus and build credit as long as you are in good standing. Another option would be a credit-builder loan. You request the loan, and the funds are put into a savings account that you do not have access to until you pay it off. As you are paying the loan, the lender is reporting that activity to the credit bureaus and you are building credit. Since the lender is not risking any loss by giving you the loan, they will accept those who are just starting out. It is important to keep in mind that while it may be helping you grow your credit score, it can also ruin it if you miss out on the payments.

Now that you have at least gotten some credit to your name, you might want to start working towards an excellent score. Excellent scores show trust, and you can qualify for better offers. Here are some ways to see that excellent rating.

  • Pay your bills on time. The number one thing that affects your credit score is payment history. Make sure you are paying back what you use or at least making minimum payments on time.
  • Use your cards wisely. While you need a credit card to get good credit, you cannot use it as much as you would like. It is highly recommended that you only use about 30% of your available credit limit.
  • Open different accounts. Having a variety of credit card accounts and loans also looks good to creditors. It shows that you can manage and maintain a few different accounts.


We hope this information on how to build credit is helpful to you.

Empower Brokerage is dedicated to helping you educate your clients on the insurance they need and staying on top of their health. Whether it’s through webinar training, one-on-one calls, seminars, or marketing plans. We want you to be successful. Give us a call if you have any questions 888-539-1633.

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