Your credit history plays a role in more than you might expect. It can affect your ability to borrow money, the interest rates you’re offered, housing options, and even some everyday opportunities. In short: credit matters. But if yours needs a little TLC, you’ve got options.
(Real-life help. No judgment.)
Before diving in, it helps to take a quick financial pulse check. Ask yourself:
- Do I have a written budget?
- Is my income consistent, and does it cover my monthly expenses?
- Do I have at least a few hundred dollars set aside to cover a not-so-fun surprise?
If money already feels tight, adding a new credit card or loan payment could make things more stressful—and stress doesn’t do your credit (or your sleep) any favors. A solid foundation makes building credit a lot smoother.
Ways to Build or Rebuild Credit (One Step at a Time)
- Use a credit card, on purpose
One of the most common ways to build credit is with a credit card. The key is intention. Use it for a planned, budgeted expense, like gas or groceries, and pay it off in full every month. This shows lenders you can handle credit responsibly. - Try a secured credit card
A secured credit card works a lot like a traditional credit card, but it requires an upfront, refundable deposit. That deposit usually becomes your credit limit.For example, you put down $300, and your credit limit is $300. You’ll get a monthly statement with a balance and a minimum payment—just like any other card. Your deposit stays put unless the account goes unpaid.The trick? Treat it like a regular credit card. Keep balances low and pay on time every month. Secured cards are often a great option for people new to credit or rebuilding it. As your credit improves, you may eventually get your deposit back—kind of like a reward for good behavior.
- Consider a secured loan
A secured loan is another way to build credit. With this option, your own savings are used to secure the loan, and payments are made over time. Many people like this option because payments can usually be set up automatically, resulting in less to remember, and fewer chances to forget.Set it and (almost) forget it. Your future credit score will thank you.
- Use a co-signer or joint account
A co-signer on a loan or a joint owner on a credit card can help you qualify for credit. Keep in mind it’s a shared responsibility; both people are equally and legally responsible for the debt. That means if something goes wrong, it affects everyone involved.If you go this route, choose carefully, talk it through, and make sure everyone’s on the same page. Credit-building should strengthen relationships, not test them.
- Become an authorized user
Being added as an authorized user on someone else’s credit card can also help build credit. You’re not responsible for the balance, but the account activity may still show up on your credit report. Which means if they pay on time, great. If they don’t… not so great. Only choose this option with someone you trust to manage their credit responsibly.