Afraid of getting rejected for your first apartment because you don't have a credit history? Want to move away from needing co-signers so you can stand on your own? Even with no credit history, you can start building credit in as little as 3 to 6 months of activity. We’ll show you how to make credit cards, loans, and even bills work in your favor to build your credit score so you can be more financially independent.
Why is it Important to Establish Credit While You're Young?
Landlords, lenders, and insurers don't know who you are and rely on your credit history to mitigate risk and predict if you’ll pay on time. Establishing credit when you're young helps you hit the big milestones of adulthood. A solid credit score, generally 700+, will help you:
- Finance a car at a lower rate.
- Obtain a mortgage.
- Pass background checks for certain jobs (finance, security, government).
- Secure an apartment without a co-signer.
- Access better terms for credit cards (higher limits, lower APR).
- Pay less for renters and auto insurance in most states.
We’ll show you how to start building credit so you can get the big things in life done with better terms and lower costs.
Ways to Build Credit
Building good credit early can save you money on loans and mortgages and give you leverage for negotiating better terms. Follow the methods below and start improving your credit within 90 days—even if you’re a beginner with no credit history.
Pay Bills on Time
Paying bills on time is a cornerstone of building and keeping good credit because it signals to lenders you are “low risk.” On the other hand, being late on a payment, even just once, can have a negative effect on your credit. If you've missed a payment, here’s how to minimize damage:
- Bring past-due accounts up-to-date. Consequences worsen by age of delinquency (30/60/90+ days).
- Call the lender and ask for a one-time late-fee waiver or goodwill adjustment.
- Prevent future missed payments by setting up autopay or calendar reminders and alerts.
Payment history makes up 35% of your total credit score, making paying bills consistently and on time a powerful tool. This applies to any accounts that report to credit bureaus, such as student loans, credit cards, and some utility bills.
Keep Your Credit Utilization Rate Low
Credit utilization rate is the percentage of a credit card’s limit in use. For example, if your credit card has a $2,500 limit with a $250 balance, its utilization rate is 10%. Keep this rate below 30% because higher utilization signals greater risk to lenders. This is important for people just starting to build their credit because maxing out your credit card could hurt your score before you've established it.
Open a Credit Card
For young adults starting out, knowing how to use a credit card to build credit is essential, but choosing a credit card that works for you can feel overwhelming with so many choices. If you're looking for a beginner-friendly option, Golden 1’s Member First credit card is made for people establishing their credit. With a deposit to a designated account, you’ll receive a credit limit equal to that amount with no annual fee. When you use your card responsibly and make on-time payments, Golden 1 reports those payments to the credit bureaus, helping you build your credit history.
Whether you choose Golden 1 or another card, here are a few tips for finding a card that works for you–and building your credit score:
- Consider a student, starter, or secured card that doesn't require a credit history.
- Check if your card reports to all three credit bureaus (Experian, Equifax, TransUnion).
- Keep your balance below 30% of your credit limit.
- Never go over your limit to avoid extra fees.
- Turn on autopay for at least the minimum so you don't miss payments.
- Pay in full each month, if you can, to avoid interest.
Become an Authorized User
Becoming an authorized user on another person's credit card (usually a parent or spouse) can be a great way to help your score. You may want to consider this option if the primary card holder has:
- Good credit.
- A track record of on-time payments.
- Low utilization rates.
- A long credit history.
If not, this may not be for you because any negative activity on their part can hurt your credit score.
Get a Co-Signer
If you have trouble getting a credit card or loan, a parent or spouse can apply as a co-signer. In this arrangement, their credit and income back your application to boost approval odds and potentially lower your rate. Be aware that your co-signer is equally liable and any late or missed payments will hit both of your credit reports. Only use this option if you're certain you can consistently pay on time.
Get a Credit-Builder Loan
A credit builder loan can be a good option for people with no credit history or those unable to get a regular loan due to limited or poor credit. With Golden 1’s Credit Starter Loan, you can borrow up to $1,500 or up to $2,500 with a guarantor or co-signer at low interest rates and with no collateral required.
They typically follow these steps:
- You apply for a loan and the amount borrowed is locked into a savings account or a CD.
- You make fixed monthly payments like a regular loan (typically 6–24 months).
- These payments are reported to the three credit bureaus.
- Once the loan is repaid, you'll have access to the full “borrowed” amount.
Like any loan, missed payments will hurt your credit score, so we recommend setting up autopay to prevent that.
Build Credit When Paying Rent
Most landlords don't report rent, however you can enroll in a rent reporting service that will verify and submit your on-time rent payments to the three credit bureaus. These services can be worth it if you don't have a history of on-time payments to creditors and you're trying to improve your credit score.
Have a Mix of Credit Types
Having diversified credit types can help your credit score by showing you can handle various obligations. A blend of revolving accounts (credit cards) and installment loans (auto, student, credit-builder) strengthens your credit mix and raises your
score over time. If you're looking to add an installment loan to your credit mix, Golden 1's credit starter loan is made for establishing new credit, with low interest rates and no collateral required.
Just remember not to open too many accounts at once in a short period. Each new account and hard inquiry will temporarily lower your score and reduce your average account age. For best results, space out your credit applications by 3 to 6 months.
Monitor Credit Reports Regularly
Manage your credit history by checking your reports online at least once a year from the three major credit bureaus. You're entitled to one free report from each of these bureaus per year. Review the reports and check for any errors, including:
- Incorrect payment histories.
- Fraudulent accounts.
- Duplicate or unknown accounts.
- Incorrect limits or balances.
Dispute any mistakes with each credit bureau showing the error. You may be required to send in proof in the form of statements, IDs, or screenshots. Bureaus will usually investigate within 30 days and may recommend a fraud alert or credit freeze if ID theft is suspected.
Start Building Your Credit Today
Building credit takes time, but you could start seeing progress in as little as 3 to 6 months if you follow some of the steps we mentioned. Be patient as you work toward a credit score in the good range of 700+ through hard work and consistency. If you’re looking for banks that help build credit, Golden 1 offers tools like Credit Sense that helps track your score so you can start building your credit today.
For more support, make an appointment with one of our financial coaches for personalized advice to help you gain control of your credit.
