Steps to Establish New Credit

Open a Secured Credit Card: This requires a cash deposit as a guarantee but works like a regular credit card. The payments are reported to at least one of the credit bureaus, which helps build credit.

Become an Authorized User: Being added as an authorized user on a trusted relative or friend can help boost a person’s credit. However, it is important to ensure that the primary cardholder has a positive payment history.

Apply for a Credit-Builder Loan: These are typically small loans offered by smaller banks and credit unions that help people build credit.  Payments are usually reported to at least one of the credit bureaus, so on-time payments help build positive credit. The loan amount is held in a savings account, and once all the payments have been made, the full amount is released to the borrower.

Get a Retail or Gas Card: Sometimes retail and gas credit cards are easier to obtain than traditional credit cards. By using the card for small purchases only and paying off the balance in full each month, it will help build positive credit.

Use a Cosigner: Some people will ask a trusted relative or friend to cosign for a loan or credit card.  The thing to keep in mind is that if any payments are missed, it will affect both the borrower and the cosigner’s credit.

Report Rent and Utilities: Check to see if your leasing company or utility services will allow payments to be reported to any credit bureaus. Consistent on-time payments can help establish a credit history.

Stay Patient and Persistent: Building credit takes time and consistent effort.