How to Build Credit From Scratch

Starting with no credit history can feel like a catch-22. You need credit to get credit, but it seems like no one will give you credit until you have some. It’s a tricky situation, but even if you have no credit history at all, there are a few reliable ways to build credit from scratch.

Why no credit history is an issue

When a lender looks at your application, they’re trying to answer one big question: will this person pay me back? If you have no credit history, there’s no evidence to point to. That makes lenders nervous, and most of them respond by either denying the application or approving it with stricter terms.

A thin credit file—meaning you have very few accounts or a very short history—has similar effects. So, when building credit, the goal is to create a track record of that show’s you’re a trustworthy borrower. The strategies below are designed to help you do that, even if you’re starting from the beginning.

Use a secured credit card

A secured credit card is the most accessible starting point for most people. Here’s how it works: you make a cash deposit—typically $200 to $500—which becomes your credit limit. From there, you use it exactly like a regular credit card.

You then use the card for small, regular purchases, such as gas or groceries, and pay the balance off every month. Those on-time payments get reported to the credit bureaus, and over time, they build a positive payment history.

After 12 to 18 months of consistent use, many issuers will upgrade you to an unsecured card and return your deposit. Be careful, though: if you use a secured credit card poorly, it can still hurt your credit. The goal is to demonstrate responsible use, not just to have the card.

Open a credit-builder loan

Credit-builder loans are designed specifically for people who are establishing credit. You can find them at some credit unions and community banks.

The structure of a credit-builder loan is a little different from a standard loan. Instead of receiving funds upfront, you make monthly payments into a savings account for a set term—usually 6 to 24 months. When the loan is paid off, you receive the accumulated funds. Your payment history gets reported to the credit bureaus throughout, which is what actually builds your credit.

By the end of the term, you’ll have a credit history and a small amount of savings. It’s a slow approach, but a good one.

Become an authorized user

If a trusted family member or partner has a credit card with a long, positive history, being added as an authorized user on that account may cause their history to show up on your credit report.

This doesn’t work with every card issuer or every credit bureau, so it may be worth consulting a financial professional before banking on this strategy. It also comes with a caveat worth discussing upfront: the primary cardholder’s behavior on the account will affect your credit, and vice versa. Make sure you’re both on the same page about how the card will be used.

A few things to keep in mind

Whichever approach you take, a few habits will accelerate your progress:

Pay on time, every time. Payment history is the single biggest factor in your credit score—35%. Even one missed payment can set you back.

Keep balances low. Even on a secured card with a small limit, try to use less than 30% of your available credit at any given time.

Be patient. Credit takes time to build. Most people start seeing meaningful scores after six months of activity, and scores improve steadily with consistent behavior over 12 to 24 months.

Don’t apply for multiple accounts at once. Each application generates a hard inquiry on your report, which can temporarily lower your score.

Start your credit journey with Horizon

Whether you’re new to credit or rebuilding after a setback, Horizon is here to help. You can apply for a credit card today, or reach out for some advice. Our team will be happy to walk you through the options that best fit your situation.