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11 Credit Building Strategies

Your credit score affects your ability to get a loan, a credit card, or even an apartment. Here are key credit building strategies to use this year.

August 12, 2022

This article is provided for informational purposes only and should not be construed as legal or investment advice. Always consult with a professional financial or investment advisor before making investment decisions.

Your credit score is very important for your financial success in life. But many of us don’t have the best credit — or we simply haven’t built much of a positive credit history yet.

If this is you, don’t worry — there are many credit building strategies you can use to boost your credit rating. In this article, we’ll outline some of the best options. 

Why does credit matter?

Credit matters because it affects your ability to:

  • Get a loan

  • Get a credit card

  • Get a mortgage

  • Get a good interest rate on a loan

  • And even get an apartment

Your credit score follows you throughout your adult life, it’s very important in many aspects of your personal finances. And it’s not just about your score — the contents of your credit report also matter. 

What goes into a credit report?

Credit reports contain your basic personal information, as well as information about your past use of credit (loans, credit cards, etc.). This includes your payment history, current balances and credit inquiries. Reports will also show any negative marks, such as bankruptcies and bills that have been sent to collections.

Credit reports tell lenders about your creditworthiness, which helps them assess whether or not they want to loan you money. Your creditworthiness will influence your ability to get credit, and also the interest rate that a lender will extend to you.  

You can request a free credit report once per year at, or you can use a tool like Credit Karma or Credit Sesame to monitor your credit score for free. 

11 credit building strategies

If you want to improve your credit, there are various ways to do so. Here are some options to consider. 

Secured credit card

A secured credit card is a good option for those with little to no credit history. These cards require that you put a deposit into a locked account. The lender will then extend the same amount of credit to you on a secured card. So if you put up $500 in the account as collateral, you’ll get a $500 credit limit. You will get your original deposit back when you close the card or convert it to a normal credit card in the future.

The idea here is to start using the credit card and paying it off on time, so that you can begin to build a credit history. Because the card is backed by your own money, you don’t need good credit in order to open a secured card. 

Credit-builder loan

A credit-builder loan is just like a secured credit card, in that it requires you to deposit cash in order to get the loan. For example, you might deposit $500 and get a $500 loan, which you can pay back in monthly payments. 

The sole purpose of these loans is to build a positive repayment history. You will get your original deposit back once you’ve paid off the loan. 


Co-signing is when someone else helps you obtain a loan or credit card. Someone with better credit than you can co-sign your loan agreement, which helps you get approved with the lender.

Co-signers are liable for the debt that they co-sign for, so you’ll need to ask someone that trusts you. Parents and other relatives are a good place to start. 

Authorized user

You can become an authorized user on someone else’s credit card account, which can help boost your own credit score. Again, this person will need to trust you fully, as you will be able to make purchases using their credit card account. 

Pay bills on time

Payment history makes up 35% of your credit score, so it’s quite important to have a positive history. Late payments can ding your credit, so make sure to pay all your bills on time. 

If you have a credit card, a good way to build credit is to put regular expenses on it, then pay off the full balance every month. This way, you’ll build a positive payment history, and you won’t have to pay any interest. 

Keep credit utilization low

Credit utilization refers to how much of your available credit you are using. If you have a $1,000 limit on a credit card and have a $300 balance, you have a credit utilization of 30%. 

It’s best to keep credit utilization low in order to boost your credit. When building credit with a credit card, that means staying well below your credit limits, and paying your bill on time every month. 

Don’t open too many accounts at once

If lenders see that you open several accounts around the same time, they could view that as a red flag. It’s best to only open a new account when you need it and to avoid multiple account openings around the same time. 

Keep accounts open

Your average age of accounts contributes to your credit score. When you close an account, that lowers your average age. So, it’s best to keep older accounts open — even if you aren’t using them. 

You may want to put a small charge on old cards, perhaps once per year, and pay them off immediately, to prevent the lender from closing the card automatically. 

Experian Boost

Normally, bills for services like phone, internet, and streaming services won’t help with credit building. However, Experian offers a service called Experian Boost, which lets you add your phone bill, utility bill, and other bills to your account. Once added, paying these bills on time will help boost your credit score. 

Experian is one of the credit bureaus — the companies that manage credit reporting. 

Use multiple forms of credit

Credit mix makes up 10% of your credit score. This refers to the variety in types of credit accounts that you have. For example, if you have student loans, a personal loan, and a car loan this will boost your score more than simply having only student loans. 

However, keep in mind that positive payment history matters much more than credit mix. Make sure you stay on top of your monthly payments. Don’t take out loans unless you actually need them — there are cheaper credit building strategies to try first. 

Pay down existing debt

If you have debt on credit cards or other loans, paying down the balances can help improve your credit by lowering your utilization. 

Tallyis an app that can help qualifying borrowers consolidate credit card balances into a lower interest line of credit. Learn more about how Tally works here

Bottom line

Credit building can be a slow process, but the benefits are well worth the effort. By utilizing the strategies above, you can improve your credit rating substantially. 

And remember, the most important thing is staying on top of your bills. A single missed payment can ding your score, so it’s wise to set up automatic payments on all your credit accounts. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.