how to build credit from scratch?

Building credit from scratch can seem intimidating, but it doesn’t have to be.

However you choose to do it, just make sure to always pay on time and only take on responsible amounts of credit debt. 

These are the most common ways of building credit for the very first time.

• Secured Credit Cards:

1. 1. 1. These function like a traditional credit card, except you must first deposit a certain amount of money–between $50 and $300– into a separate account. The bank will then give you a line of credit equal to the amount you’ve deposited. As you use the card you’ll build credit. In many cases, after consistently paying on time, the Bank will allow you to “graduate” to a traditional credit card.

• Credit Builder Loans

1. 1. 1. Banks and Credit Unions often offer these kinds of “loans.” You will deposit a small amount, typically between $300 and $1,000, into a locked savings account. You then pay the “loan” off for 6 to 24 months. Your payments are reported to the credit bureaus, and once you’ve paid off the loan, your initial deposit is returned.

• Retail Store Credit Cards

1. 1. 1. These are Credit Cards offered at many different department stores, retail stores, or gas stations. These are typically easier to open than a traditional credit card and can be an excellent way to build initial credit.

• Other Methods

1. 1. 1. Rent reporting: Rent reporting services can help you build credit by showing that you consistently pay rent on time. You can also do this through Kikoff!

• Cell Phone and Utility Payments:

1. 1. 1. Certain services, like Experian Boost, allow you to report your cell phone, water, electrical, and other utility payments to credit bureaus. This can help boost your score by showing even more on-time payments.

A Kikoff Credit Account can also help you build credit, whether you’re just starting or have established credit. You can sign up in minutes, and starting at $5 a month, you can build a credit history by using a $⁨750⁩ line of credit to use for Kikoff purchases. This doesn’t expire, so you can build credit on your schedule.