Tips to Establish First-Time Credit

Simple steps can lead to a bright financial future

The benefits of having good credit are plain to see. It can make it easier to rent an apartment, take out a car loan and buy a home—among other things. But if you’re among the millions of Americans who don’t have a credit history, you may be missing out.

Individuals who don’t have any credit history are said to be credit invisible. That includes one in 10 U.S. adults. And there are even more people with so-called thin credit who are also unscorable. 

Establishing credit may be the first step. Whether you’re among the credit thin or invisible, there are several ways to do it. And the general idea behind each strategy involves building a solid history over time with responsible credit use.

Credit Fundamentals

Before you start building credit, it can be helpful to understand some of the fundamentals. 

A credit score is a number that represents how likely you are to pay back a loan on time. Your score is calculated by credit reporting agencies that apply information from your credit report to mathematical scoring models. It’s normal to have multiple scores because the three major credit reporting agencies (Equifax®, Experian® and TransUnion®) have their own scoring models.

How Can I Establish First-Time Credit?

There are many ways to build credit. But there are some important things to keep in mind with any path you choose: Remember to use credit responsibly, spend within your means and pay bills on time. Together, these habits can help you build a positive credit history.

Need access to a credit line? Here are four ways to get started:

  1. Apply for a credit card. Lack of credit history could make it difficult to get a traditional credit card. But there’s another option called a secured credit card. With a secured card, you make an initial deposit, just like when you move into a new apartment. As you make payments on the card, you start to build a positive credit history. It could also help you transition to a traditional credit card.
  2. Become an authorized user. If your parents trust you and are willing, they could make you an authorized user on their card. Becoming an authorized user enables you make purchases. But the primary account holder is ultimately responsible for payments. Being an authorized user could allow you to benefit from the primary account holder’s credit history. But negative actions could also be reported. Be sure to check with the card issuer to see how they handle reporting authorized users to credit agencies. 
  3. Set up a joint account or get a loan with a co-signer. Much like becoming an authorized user, setting up a joint account or getting a co-signer on a loan could also give you access to credit. The biggest difference, however, is that you are both responsible for making payments. And any late payments or negative actions could affect the co-signer’s credit as well as your own.
  4. Take out a credit-builder loan. Credit unions may offer small loans, anywhere from $300 to $1,000, that allow you to build your credit history. The loan is deposited into a savings account, and you make small payments over a fixed period to pay it back. Payments are reported to credit agencies to help you establish credit. And once the loan is paid off, you get all the money back.

Building credit is a process. But that doesn’t mean you’re totally out of luck if you’re just starting to establish credit. In recent years, some companies have worked on developing alternative scoring methods to determine creditworthiness. The new methods consider data and analyses not typically used in credit reporting, including rent payments, phone bills and bank account transactions.

How Can I Monitor My Credit?

Once you’ve started to build credit, consider monitoring your progress. CreditWise® from Capital One® can help you better understand your score. It’s a free tool available to everyone, and it provides a personalized summary of key factors that may affect your VantageScore® 3.0 credit score, provided by TransUnion.

Another way to stay on top of your credit is to check your credit reports. You can receive a free copy from each major credit reporting agency every 12 months. To get yours, visit

Start with assessing where you currently stand. You can then decide whether something like a secured credit card is right for you. As you build credit with responsible use, you could set yourself up to take advantage of the opportunities good credit offers.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate the Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Your CreditWise score is calculated using the TransUnion VantageScore® 3.0 model, which is one of many scoring models used by lenders. It likely won’t be the same model your lender uses, but it is an accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion.

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