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How to Build Credit

Dan Steadman

Financial Advisor, MoneyBeagle

How to Build CreditIf you have a less than perfect credit score, or you’ve never had any credit score at all, you’re probably wondering how you can start building your score. Building credit is one of the most important things you can do for your personal financial situation. The longer you have a lack of credit, the less opportunities you will have to grow your wealth or enjoy a decent lifestyle.

But the strategy you use for building your credit will depend on the situation you’re in. If you have never had credit before, your building process will be different than if you have poor credit because of previous financial issues.

This guide has been created to help our readers understand how to build their credit for the future. If you’re having trouble finding reliable information on how to build your credit, this article is the perfect resource for you. Make sure to take in all the information provided before beginning your credit building journey.

Building Credit for No Credit

If you don’t have a credit score, it’s probably because you’re young or because you’ve never applied for financing before. Sometimes the hardest thing to do is to apply for your first loan or credit card – it may seem like no lenders want to take a chance on you. But there are a few ways you can start to build your credit.

Secured Credit Card

A secured credit card is a card that has a deposit on it. If you want to build your credit, but no one will accept your credit card application, you can offer to deposit an equal amount to the limit. For example, if you want a $500 credit limit, you would deposit $500 into the credit account.

Many lenders offer this type of credit card to help people get on the lending ladder. Although you will need money to put up to secure the card – this won’t be possible for everyone. Just make sure that you make your payments on time – this will help you build your credit for the f

Student Credit Card

Student credit cards are offered to those who are at university. Lenders know that students who are studying often need a credit card to help fund gaps in income, therefore they offer credit cards to students even if they don’t have a solid credit history. This is a good option for those who are still in school.

Phone Plan

Sometimes the easiest way to start building credit is to get a phone plan. Believe it or not, getting a post-paid phone plan typically requires at least a soft credit check. You’ll want to make sure that you pay your bill on time – this will indicate to lenders that you can maintain financial agreements.

Building Credit for Bad Credit

If you have a bad credit history, your approach to building credit will be different. Check out our suggestions below.

Debt Consolidation Loans

So, what is a debt consolidation loan? A debt consolidation loan pays off your current debts and reissues them to you at a lower interest rate – it also consolidates all your debts into a single payment. This makes paying off your debt easier, it also reduces the amount of debt that you will end up having to pay back. This is one of the best ways to start building your credit.


Credit cards can be hard to pay back because you can constantly re-spend your limit. This results in countless people being stuck in debt traps they can’t escape. If you use a loan to consolidate credit card debt, you’ll find that the structured payments of a term loan make paying back your debt much easier. The lower interest rate also helps! Millions of Americans have got their financial health back on track after using a debt consolidation loan to reorganize their debt! Read more about getting loans to pay off credit card debt.

Keep Balances Low

If you can’t consolidate your debt, you should try and keep your balances as low as possible. One of the major components of your credit score is how high your balances are. If you pay down your debt, you’ll see immediate improvements in your score.

Exhibit Good Behavior

Lastly, make a commitment to exhibiting good borrowing behavior in the future. If you start making all your payments on time, and paying down your debt, you’ll find that you score improves quicker than you think!

Avoid Risky Lending Products

Another way to help make yourself more attractive to lenders is to stop using risky lending products. Lenders want to find borrowers who don’t exhibit risky characteristics.

Benefits of Building Credit

So, building credit takes quite a bit of effort – is it really worth it? You probably ask yourself this question a lot, but the answer is simple – yes. Having good credit is one of the best ways to ensure that you have a successful financial future. It provides you with opportunities that you would not have access to if you had a poor credit score. Below we will explore some of the advantages you’ll be afforded if you commit to building your credit.

Lower Interest Rates

Those who have better credit scores are offered lower interest rates. Lenders know you are not as risky of a borrower so they offer better deals. In many cases, the exact same lender will offer different interest rates to different clients (all based off credit score).

Easier Access

If you have a higher credit score, you’re more likely to be approved for financing. This means that you will be able to take advantage of investment opportunities and other beneficial financial activities in the future.

Better Lenders

Not only do you have easier access to finance at lower rates, you also get to work with better lenders. The lenders with the best reputations tend to also have the highest credit score requirements. When you have a low credit score, you will often be working with people who are preying on desperate borrowers – these companies may end up taking advantage of you.


Building your credit is serious business. Make sure to commit to taking the process seriously. If you manage to take a step in the right direction, you’ll find that you can fix your credit in no time!

Dan Steadman

Dan Steadman

Financial Advisor, MoneyBeagle

Dan is one of the top financial experts when it comes to debt consolidation. With more than 20 years of experience helping people tackle debt, he has a unique insight when it comes to solving debt-related problems. 

Dan got his start when he went to work for a bank after getting his Business Degree. He worked his way up and became a loan officer. This position gave him unique insights into the ways that financial products work and how people can utilize different financial products to improve their lives. He’s seen hundreds of success stories and just as many failures – so he knows what steps are most likely to help his readers.

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