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How Do You Build Good Credit?

Last Updated: March 8, 2022
4 min read

Let’s Learn About: Building Credit

  1. You can start to build credit with a student card or a secured card

  2. Using your credit card responsibly helps build good credit

  3. Request your credit report to make sure errors don’t hurt your credit

Building good credit may start with your first credit card. If you’re in college, a student credit card might be the right card for you. If you’re out of school, and haven’t had a chance to start building credit, you may want to consider a secured credit card.

As you get access to credit (i.e., credit cards, personal loans, etc.) you can start building a good credit history if you act responsibly and meet the terms of your credit agreement. These simple credit card tips may help you get a good credit score:

Best ways to start building credit

Start building credit with a student or secured credit card

You might be wondering how to build a credit history if you have little to no credit. One way to start is with the Discover it® Secured Credit Card, in which you provide a refundable security deposit, and you get a credit line that equals your deposit amount (starting at $200).1

Be sure to charge only what you can pay for each month so that your balance remains low and you’re able to make your monthly payments on time and establish good habits. You’ll also want to check whether your credit card issuer is reporting your activity to all three major credit bureaus.

If you are in school and want to build a credit history without a security deposit, you may consider the Discover it® Student Cash Back credit card, which offers rewards while you build your credit history.

Only get the credit you need

When you’re just starting to build your credit history, you might think that opening a bunch of accounts will help your score. In reality, this might have the opposite effect.

First, you need to know the difference between soft inquiries and hard inquiries. Soft inquiries are when a business checks your credit report to prescreen you and will not affect your credit score. On the other hand, a hard inquiry, such as an inquiry made as the result of a credit card application, can affect your credit score.

For example, with FICO® Scores 2, quickly opening accounts and applying for new credit makes up roughly 10 percent of your credit score. Too many hard inquiries can hurt your credit score.

Ways to build and maintain good credit with responsible use

Pay your credit card bill on time and in full

Make automatic payments your friend! Spend within your budget so you can pay that entire balance every month when it’s due. At the bare minimum, make your minimum payments so that you don’t incur late fees or trigger penalty APRs. Missed or late payments can appear on your credit report for lenders to see when you apply for credit cards, loans, mortgages, etc. in the future.

Keep your credit utilization ratio low

Your credit utilization (or debt-to-available credit) ratio is defined by how much of your available credit is currently being used.

To figure out your credit utilization ratio on any credit card, divide your current credit card balance by your credit limit and multiply that number by 100. The number you get is your credit utilization as a percentage. Credit companies will calculate this number across all of your open credit accounts.

In general, a lower number is better.

Get a diverse mix of credit

Credit cards, bank loans, retail accounts and mortgage loans can all be considered when your credit scores are calculated. While it’s great to have a mix of several types of accounts, it’s also important not to open too many at once.

How to build credit without a credit card

If you’re unable to get a credit card of your own at first, you might be able to build credit history with responsible use by having a friend or family member add you to their credit card account as an authorized user.3 You don’t need a credit score to be added as an authorized user, because the account owner is responsible for paying the credit card issuer for any charges you make. The credit card issuer will usually report account activity under the names of authorized users. In that case, you will share the account owner’s credit history, and start to build your own credit.

Get your credit report and check for errors

Everyone is entitled to a free copy of their credit report from the three major credit reporting agencies (Equifax, Experian and TransUnion) once per year. You can request a copy of your credit report at During the COVID-19 Pandemic, Equifax, Experian, and TransUnion are offering free weekly credit reports.

You’ll want to look inaccuracies, especially in balances or payment history. If you find any information that is incorrect, contact the business that issued the account or the credit reporting company that issued the report.

Continue with good habits as you get a longer credit history

Length of credit history will impact your credit score, so closing your earliest credit card can have a negative impact on your score. Keep the accounts you have open and active for as long as possible.

Once you know how to build credit, a little attention to detail every month may be all you need to stay on top of your credit score and help build good credit.

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