How To Establish Credit With No Credit History

Learn about the first steps to building credit

You can take several steps to build a strong credit history, which can help you get approved for loans like mortgages, personal loans, credit cards, and car loans with better rates.

If you have no credit history, lenders may be more reluctant to approve you for loans because they view you as more of a risk than someone with a track record of paying off loans reliably. To establish a credit history, you'll need to slowly prove that you, too, can make payments reliably.

Key Takeaways

  • Check your credit report so you can understand your current credit situation.
  • To build your credit history, consider applying for a secured credit card, which requires a deposit.
  • You can also become an authorized user on another person's credit card to help you establish credit history.
  • Once you’ve started to establish a credit history, keep it in good shape by paying bills on time.
  • Avoid letting your credit utilization ratio get too high by not maxing out your credit lines.

What Is Credit History?

Your credit history is established credit, which indicates your ability to repay debts and a demonstrated responsibility in repaying them.

Your credit history is recorded in your credit report, which details financial information about you. It includes the number and types of your credit accounts, how long each account has been open, amounts owed, the amount of available credit used, whether bills have been paid on time, and the number of recent credit inquiries.

Here are steps to take to start to build a strong credit history:

Review Your Credit Report

First, make sure that you understand your credit history by getting a free copy of your credit report. You may discover that because of a gym membership or a student loan, you may already have a credit history.

If you’ve recently been rejected for a credit card or loan, then you are entitled to a free copy of your credit report from the credit bureau that the lender used to check on you. The three major credit bureaus are Equifax, Experian, and TransUnion.

You can get a free copy of your credit report at least once a year from each of the three bureaus through

Your credit report doesn’t include your credit score. If you want to know your score, some companies will charge you, but you can get a general idea of it by using one of the free online credit score estimating tools. Once you have a credit card, the issuer also may provide your score free of charge.

How To Build a Credit History

While it would seem that having no credit is a good thing, lenders want proof that if they give you money, you will repay it. If you need to establish or improve your credit history, here are some of your options:

Secured credit cards

With no credit history, you might qualify for a secured credit card. A secured card requires you to keep a certain amount of money on deposit, which then serves as the credit limit on your card. Your credit limit on a secured credit card may not be very high, but it will get you started toward a credit history. Once you’ve established a good track record with that card, you may be able to qualify for an unsecured credit card.

If you have a checking account with a bank, that bank may be more likely to approve you for a secured or unsecured credit card because you have an established relationship with them. Another option is to take out a small secured loan from the bank and pay it back over time. Keep in mind that you’ll have to pay interest on a secured loan.

Debit cards can function much like credit cards, but they will not help you establish a credit history because you are using your own funds, not a line of credit.

Authorized user

If you have a spouse, parent, or someone else with a credit card and good credit history, check if they are willing to add you as an authorized user on their account. This way, you can build your credit history as they make regular payments on that card.

Adding an authorized user to a card is a risk to the cardholder, so, if they include you as a user, they may not want you to actually use the card if they have concerns about how you will spend and whether you will repay them.

Store credit cards

Store credit cards, offered by major retailers, generally have more lenient approval requirements. These cards often come with an account-opening bonus, such as 10% off your first purchase. 

Consider taking advantage of a credit card if you frequently make purchases from that retailer. Aim to pay the bill in full each month, as interest rates on store credit cards tend to be higher than average.

Financing with interest-free offers

Many retailers will allow you to purchase items on credit with loans that have no interest for a set period of time—usually 90 days. These programs often report your payments to credit bureaus, which will help you establish credit.

To avoid paying interest or hidden fees, make sure to pay it off completely before the allotted period expires. Keep in mind that if you don't make payments on time, your credit can be negatively affected.

How To Use Credit Once You Have It

Once you have credit, you need to use it responsibly to maintain good credit. To do that, you'll need to pay your bills on time, avoid applying for too many forms of credit in a short time frame, and keeping your credit utilization ratio low by spending well below your limit.

Setting up autopay can help you ensure that you make payments on time. Paying off your balances monthly can help save you a significant amount of money in interest.

The length of time that your accounts have been open is also factored into your credit history. The longer you have had credit, the less of a risk you are to lenders. So, even if you do not use a credit card, keeping a credit card account open can help improve your credit score.

How Do Student Credit Cards Work?

Student credit cards are cards offered by major lenders like Bank of America, Discover, and Capital One. If you are a student, they are a great option to build credit. They usually offer lower interest rates and offer credit to people with no existing credit history. Sometimes they also offer sign-up bonuses, which will pay you a certain amount in points you can use for a vacation or for cash back.

Does Paying Off My Credit Card Each Month Hurt My Score?

Paying your credit card off in full every month will not hurt your credit score. Instead, paying your credit card off in full every month saves you from spending money on interest and can actually help your score by decreasing your credit utilization ratio.

What Is the Easiest Way to Establish Credit History?

One of the easiest ways to establish credit history is to be added as an authorized user to someone else's account if they have excellent history. Getting a secured credit card or a credit card through your bank are other easy ways to build credit.

The Bottom Line

You can take several steps to start to build a good credit history, from getting a secured credit card to responsibly using a retailer's line of credit. Having a strong credit score will improve your chances of getting approved for financial products like mortgages, auto loans, personal loans, and credit cards. With better credit, you can also get better interest rates, which will save you money in the long-term.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. MyFICO. “What’s in Your Credit Report?

  2. Annual Credit Report. “Request Your Free Credit Reports.”

  3. “Annual Credit The only source for your free credit reports. Authorized by Federal law.”

  4. Experian. “How Secured Loans Can Help Your Credit.”

  5. Experian. “How Do Retail Credit Cards Affect Your Credit Score?

  6. Experian. “Interest-Free Payment Plans: Are They Right For You?

  7. Discover. "Student Credit Cards."

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.