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Building a Credit Score from Scratch


Building a Credit Score from Scratch

There is no shortage of articles and ideas online clamoring to offer you tips and pointers about how to best manage your credit. You can even find videos, radio shows, and even television shows from many self-proclaimed "gurus" who are quick to share their credit secrets with you. Add to this flood of so-called professional credit advice the advice you may have received from your family, friends, and acquaintances and before long your head will be spinning with dozens of contradictory credit improvement strategies.

Unfortunately, the truth is that many self-proclaimed "professionals" and even your loved ones can give really bad advice when it comes to your credit. Most of this advice is likely given with a very well-meaning spirit; however, bad credit advice can hurt you even if the damage is unintentional. It is important to be careful whose advice you follow when it comes to your credit, especially when you are building credit for the very first time. Here are 3 tips to help you build great credit from scratch.

Tip #1: Do Not Assume Anything

If you are preparing to build credit for the first time you may genuinely believe that your credit reports are completely blank. However, assuming that this is the case without verification is a mistake. You should begin by checking all 3 of your credit reports.

You are entitled to a free copy of these reports every year from You can also access your 3 credit reports and 3 scores (if they exist) via credit monitoring services such as those found at You should develop the habit now of checking your credit reports often. It is ultimately your responsibility to monitor your credit reports to be sure that they remain accurate and error-free.

Credit Expert Advice: If you discover errors on your credit reports then you have the right to dispute those errors on your own or you can hire a reputable credit restoration company to assist you.

Tip #2: Establish Revolving Accounts

After you have checked your credit reports, if they are indeed completely blank, then you should consider opening a few credit card accounts - aka revolving accounts. Secured credit cards are a great place to start when you have zero established credit since these types of credit cards offer less strict qualification standards than most unsecured cards will offer. In other words, qualifying for a secured credit card is an easier process than qualifying for unsecured credit cards.

Credit Expert Advice: Just remember, it is absolutely essential that you keep all of your credit card payments on time every single month and you should never revolve a credit card balance from month to month either.

Tip #3: Establish an Installment Account

Credit scoring models such as FICO like to see that you know how to manage a variety of account types. Consumers who have a good mix of accounts showing up in their credit history can potentially be rewarded with higher credit scores. However, a problem which consumers with no established credit history face is the fact that it can be difficult to qualify for certain types of loans with little to no credit. Your solution? Enter the credit builder loan.

Many local credit unions will offer credit builder loans as a means for their customers to rebuild or build credit for the first time. Credit builder loans are generally issued for a low dollar amount ($500 - $1,000) and the funds are held in a savings account while you make the monthly payments to pay off the loan. Once the loan has been paid in full the funds are released to you, plus any interest earned, and if you managed your account properly then you will probably have around 6-12 months of on-time payment history showing up on your credit reports.

Credit Expert Advice: If you are thinking about applying for a credit builder loan product be sure to ask the credit union if they will report the account to all 3 credit bureaus.

Tip #4: Ask a Loved One for a Favor

The final way to establish credit from scratch which I will mention is to ask a loved one or a family member to add you as an authorized user to an existing credit card account. Though it is true that authorized user accounts will not show up on your credit reports 100% of the time, in the majority of cases when you are added as an authorized user to a credit card the account will show up on your 3 credit reports within a few months. Plus, if you are a parent then authorized user accounts represent a great way for you to help your children establish credit without dipping your toes into the very dangerous waters of co-signing.  

Credit Expert Advice: Before being added to any account as an authorized user you should be sure that the account has a flawless payment history and a low or $0 balance. Otherwise, being added as an authorized user could backfire and hurt instead of help your credit.

Michelle Black is an author and leading credit expert with over 13 years of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.