Building a Credit Score from Scratch: 4 Easy Steps


Building credit is something of a Catch-22. Without a credit card, it’s hard to build a credit history. Without a credit history, it’s hard to qualify for a credit card. So how does someone start from scratch to build a credit score? Honest answer: By starting at the bottom and beginning the long upward climb.

Fortunately, it’s really not that tough once you get your bearings. After you’ve mapped a route, you need only follow a few basic guidelines to stay the course and actualize the end goal. We’ve put together a step-by-step plan for building a credit history, including the credit cards you’ll need to complete the journey.

Step 1: Understand what factors influence your credit score

These first two steps are simple. By simply reading this article, you can check them off the list. Let’s start with how your credit—or FICO—score is calculated. Your credit score is affected by 5 factors:

  1. Payment History: Your payment history accounts for 35% of your credit score. The goal is to establish a record of full, on-time payments. Recent history is given more weight.
  2. Amounts Owed: Your debts account for 30% of your credit score. Credit bureaus look at both your total debt and your debt-to-credit-limit ratio. Not all debts are bad, but loads of credit card debt is definitely frowned upon.
  3. Length of Credit History: How much history you’ve already established accounts for 15% of your credit score. This can make it difficult for folks just starting out.
  4. New Credit: Recent credit acquisitions account for 10% of your credit score. New accounts are handled with suspicion.
  5. Types of credit used: The types of credit utilized account for 10% of your credit score. It’s helpful to diversify.

Step 2: Learn the guidelines for building credit

Lenders use your credit score to determine your financial trustworthiness. They’re more inclined to give money to people who will successfully pay it back. To prove your trustworthiness, you must demonstrate through example. Here’s a list of simple guidelines to follow as you work your way up the ranks.

  • Make payments on time. ALWAYS. This is the #1 rule of building credit. This applies to credit cards, loans, mortgages, everything.
  • Keep credit card debt low. Use your card regularly, but don’t spend money you don’t have.
  • Stay well under your credit limit. You’ll be scored favorably if you keep below 30% of your total credit limit. To raise your limit, consider a no fee credit card.
  • Don’t take out cash advances.
  • Keep accounts open for as long as possible, especially if doing so is cost-free. This raises your average account age and your total credit limit.
  • Don’t open too many new accounts all at once. This lowers your average account age.
  • Check your credit report regularly and make sure everything is kosher. This won’t count against you.
  • If possible, diversify the types of credit you utilize. Paying through installment loans will raise your score.
  • Stay away from prepaid debit cards. They don’t improve your credit. Ever.

Step 3: Check your credit score and history

You’re entitled to one free credit report a year from However, this won’t give you your credit scores; for that, you can sign up for a credit monitoring service and cancel during the trial period. Here are some top providers and their trial periods:

Name Monthly Fee Grace Period
TransUnion $19.95 7 days $16.95 30 Days
PrivacyGuard* $14.99 30 Days

* PrivacyGuard gives estimates of your credit score from all three bureaus.

Plus, the Discover it and some Barclays cards offer free FICO scores to cardholders. If you have the Discover it, you receive your score along with your monthly statement. If you have the Barclaycard Rewards MasterCard, Arrival, Ring, Frontier, Juniper or Carnival, you can check your score online.

Step 4: Get a credit card for no or low credit (credit score = 300-629)

Now that you have an understanding of how your credit score is calculated and how to manage your spending, you’re ready to take action. Finding a credit card for which you qualify can be tricky. If you’re a student, check out our list of the best student credit cards. Otherwise, read on!

If you’re starting at square one, you should know the difference between secured and unsecured credit cards. A secured credit card is for very limited credit and comes at no risk to the issuer. When you’re approved, you’re required to make a deposit. The deposit is generally a couple hundred bucks and determines your credit limit. When you eventually close your account, the deposit is returned to you. Essentially, secured credit means you borrow money from yourself rather than a lender.

Capital One Secured MasterCard Credit Card
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on Capital One's
secure website

One of the best secured cards out there is the Capital One® Secured MasterCard®. It has a low $29 annual fee, and a $200 initial credit limit. However, based on your creditworthiness, you may need only put $49 or $99 down to get the full $200 limit. And if you don’t have $200 to spare, you can pay in installments for up to 80 days. You don’t want to use the Secured MasterCard forever, but until you qualify for better options, it’s a good place to start.

  • amber

    No it will come back to bite you. It may not be in the near future but it will come back at you. Many people do this with revolving credit and find their credit to be awful down the road thinking they don’t have to pay for their debts. I guess, if you’re not going to remain in America. I don’t know how they’d track you down if you return home. I’m sure they’ll just make it harder for subsequent foreign borrowers who really do intend to pay off their debts to get a line of credit. So, essentially, you made it harder for someone else. Yes getting a credit card helps build your credit. However, running the credit debt up is not going to help you and paying it late will hurt your score. But I guess if today is all that matters to you (and not a home, car, business loans, etc in the future) then have at it. Also, I feel awful that people are taking advantage of your credit. They aren’t obligated to pay back what you will ultimately owe. It’s a loan. And you do pay for that loan and if you ever want people to lend to you, then you would be well advised to pay it back.

  • Marty

    This makes no sense to me, my bank knows how much is on my paycheck before I do so what is the point in only making partial payment if I can pay the whole debt? That to me is good credit. My banker said a “rolling balance” , another words “make payments” is the way to go. What I’m hearing is the way to a good credit score is to stay behind and make payments.

  • Emma Collins

    Very helpful, thank you!

  • Emma Collins

    Really? Well, thank you, now I have an idea of how long it might take.

  • Mitch Dalton

    yes. stay behind and make payments. banks and credit companies make money by lending you you money. put yourself in their shoes. say you lend a friend $100 but only if he agrees to pay you $105 back in the future. so after a day or so he does… whoopee. you made $5. but another friend keeps borrowing money. he pays you here and there and he really is good for it based on his history with you. he keeps coming back. $20 here, $90 there. after a while there will be incentive to give him a better rate because now your friends want to lend him money. now there’s competition. he’s made himself an attractive borrower. he’s built his credit so you WANT to give him good rates. old friend that pays you $5 the moment he borrows is lame. he doesn’t make you money.

  • amber

    It depends. Do you want more credit or more available cash (that’s yours). I’m not a fan of debt, so I always advise against debt. Save up and pay cash. When you borrow, you pay. My husband got a large lump sum of cash one year he was laid off. I said let’s pay off our house note. He says, “No, I can write it off on taxes.” We did the math. So we save a couple of thousand dollars a year over the remainder of the life of the loan (which was 15/30 year note). Or well over a $100K not paying interest fees to the bank. I don’t know everyone’s so caught up in credit, it seems they’ve actually forgotten the value of a dollar. Credit and debt keep you broke and dependent. It’s a brilliant plan (for them), it’s a foolish plan (for you).