How to Build Credit from Scratch

Credit Information

January 22, 2021

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Building credit can feel like a puzzle. You need credit to build credit, but how do you get that initial credit? It’s true that banks usually only want to lend money to people who prove that they can pay it back. This “trustworthiness” is reflected in your credit score. So how does a person with zero credit get started? We’ve put together a few simple ways for you to start building your credit in a responsible way.

Become an Authorized User

If someone you know and trust already has a credit card, you can ask to become an authorized user of their card. This makes it so your credit report reports on this card activity. If the primary cardholder practices good habits – like paying the bill completely and on time – it can help boost your score.

But remember, this works both ways. If the credit card holder doesn’t make payments on time, your credit score can take a hit. Make sure you only piggyback on someone’s account if you can really, truly, totally trust them.

Consider a Secured Credit Card

Secured credit cards are very similar to standard (or unsecured) credit cards. The main difference is that your credit limit is set by money that you deposit. It’s sort of like a combination between a debit card and a credit card. Secured credit cards are typically easier to qualify for since the issuer is not taking on very much risk, which means they’re a great way to start building credit.

Get a Cosigner

A cosigner is someone who promises to pay your loan (or credit card bill) if you, for whatever reason, don’t. Applying for a loan or line of credit with a cosigner can give a bank the sense of security it needs to extend credit to you, sometimes even with a better percentage rate. Having a cosigner to answer to might also help encourage you to pay your bills in full, on time.

Talk with World Finance to Get a Personal Loan

We specialize in lending to people who have no credit or less-than-perfect credit. We know people are more than just their credit scores, which is why we work with them to find a loan that fits their unique needs. A personal loan from World Finance can help you build up your credit score and is a great first step toward establishing your credit. Call or visit your local branch to set up an appointment with one of our team members, or apply now.