Building credit for the first time can feel overwhelming—but trust me, it doesn’t have to be. If you're Gen Z or a millennial just getting started, here’s a step-by-step guide to help you build your credit score from scratch and unlock financial opportunities.
1. Start with a Secured Credit Card
A secured credit card is designed for beginners with no credit history. You’ll pay a small deposit (usually $200–$500), and that amount becomes your credit limit. Use it for small purchases and **always pay the balance in full and on time** to establish a positive payment history.
2. Become an Authorized User
Ask a trusted family member or friend to add you as an authorized user on their credit card. Their positive credit history will show up on your credit report, giving your score an instant boost without you needing to use the card.
3. Get a Credit Builder Loan
Credit builder loans are offered by banks and credit unions to help people build credit. Instead of getting the money upfront, you make monthly payments toward the loan, and once it’s paid off, you get the money. **Each on-time payment is reported to the credit bureaus**, helping you establish good credit history.
4. Keep Your Credit Utilization Low
One of the biggest factors in your credit score is how much of your credit limit you’re using. Try to keep your balance **under 30% of your credit limit** at all times. For example, if your limit is $500, keep your balance below $150 for the best results.
5. Always Pay On Time
Payment history makes up 35% of your credit score. Set reminders or autopay so you **never miss a due date**. Even one late payment can hurt your score, so prioritize paying every bill on time—every single month.
By following these simple steps, you’ll start seeing your credit score grow in no time. The earlier you begin, the sooner you’ll unlock better credit cards, lower interest rates, and more financial freedom!
