How to Build Credit from the Ground Up: A Guide by Timira N. Hudson

While building credit from scratch can feel like a daunting task for many, especially when becoming acquainted with the life of an adult, since you are most likely eighteen years of age, or some age around, most financial state of affairs will be foreign to you and might leave you feeling a bit flummoxed, nebulous, even. Building credit from scratch is a task that seems notoriously difficult, and yet, when you truly take an eye to it, is quite simple, and can be approached in many different ways. To build a good credit score, you are going to need to take out a loan or obtain a credit card. However, you cannot qualify for a loan or even something as simple as a credit card without some prior form of credit history. At this news, you are left feeling as if you were running in circles, ending right where you started. Well, here I am to guide you.

The first step that you are going to want to take when attempting to build credit from scratch is opening a checking account with a financial institution. From commercial banks to credit unions, Fifth Third to Bank of America, in 2025, gratitude can be given to our engineers and construction workers, alongside the technological advancements of the twenty first century, as opening a checking account with any major financial institution (of which there are many), is as simple as clicking a button—or, tapping a screen. As you do not require a long credit history to open a checking account, and yet, can use your checking account history to obtain a credit card, or loan, this would be the most intelligent step to take in pursuit of your goal of building credit. This works in your favor because if you have done business with a financial institution and leave them with a positive impression, they are aware of you and your temperament and value your business. This existing relationship can carry some weight when it comes time to get your first line of credit.

But, author, what if I do not want to carry on this step? What if I do not want to open a checking account with a bank? Well, my dear, have I news for you. There are a few other measures to take–building credit is a very simple process that can be approached in a variety of manners. There are some banks that offer credit cards to individuals who want to focus on establishing, strengthening, or even rebuilding their credit, this is called a secured credit card. Coined this because you secure the amount you borrowed with a security deposit, meaning you are providing collateral by depositing money in an account with the bank. A lender is able to apply a portion of the deposited money, or, its entirety, should you fail to uphold, or, default, on the loan. Your credit line is equal to the money you deposit. You will be unable to touch the deposited money in any form–even to pay off your balance, and you will still be expected to prove you have sufficient income to the bank to pay the credit card. Although, rest assured, the bank will be more confident in your ability to pay them back, even without great credit, allowing you to build, or even rebuild, your credit. Once active, you must ensure your lender reports all on time payments to the bureau before you apply, since you will be using this card to build your credit. Most financial institutions such as credit unions and commercial banks do this, however, some retail store cards, for example, do not, therefore it is always important to check ahead of time. If your payment history will not be reported by the card issuer, you may want to direct your attention elsewhere and continue the search for a different card. However, do not repeatedly apply for new cards, as a multitude of declines will not do you any good. Keep in the forefront of your mind that a prepaid card and a secure card are two entirely different things with two entirely different purposes. A prepaid card allows you to apply a certain amount of money ahead of time to spend later, and they do not help establish credit.

Another way to build credit is to find a person to cosign a loan with you, a person who is credit worthy and above the age of seventeen. This could be a spouse, or your parents. In the case of cosigning a loan, you would benefit from the history of their worthy credit, which could help your chances of being approved. You can then build a credit of your own with an adequate history of payment on the cosigned account. However, the person who cosigns the loan for you assumes a very large financial responsibility, as they will be sought out and punished for the debt if you fail to be responsible. When credit is extended to you, it is important that you manage it carefully, even after your history is built. Continuing on the path of responsibility and good financial management will build you a great credit history and strengthen your credit score.