This is for everyone who has no credit, bad credit, okay credit, or is deeply repairing their credit. If you have no credit you have probably struggled with getting a credit profile established; but in 2024, there are finally good ways that build credit in a couple of months and help you establish a profile creditors will love!

I went through this myself because I spent nearly twenty years paying in cash or not buying it at all. Since I didn’t have credit, my husband bought my car for my birthday on his own, and he did our home loan his own when rates were so much better and I paid a big down payment so he’d qualify. But now, my income is much higher and we want to take advantge of that as well as upgrade our home. I needed to build my own credit. I was always contributing fully to the bills but creditors and lenders can’t see that.

I did my research as I do often and over the last year I noticed how many more companies offer cards for people in desperate need of credit building help. I found some good research about the Capital One Quicksilver ONE card which is the beginner Quicksilver card. Their website touted how this was a great card for students, new adults, and those with no credit to get started with. Since a few sources were singing the praises and the reviews were good, I applied. I got approved in a minute! I’ve had the card almost a year now and I LOVE it. I’m not at all sponsored by them and genuinely researched on my own and got the card. I love the app, I love the card, I love the cash rewards, and I love how easy it is to manage my account on my phone. I get free credit monitoring too and additional discounts on websites.

I was approved for a $300 limit which is perfect. You can’t get into tremendous debt with that and I paid a bit on my card every paycheck so I rarely paid interest and kept my balance very low or at zero. This popped my score up FAST. In three months, I was in the higher 600s and it was going well. 9 months after getting the card I was flatlining my credit around 685 but I knew when I bought or refinanced a home loan, lenders prefer 2-3 solid credit lines of history and payments so instead of asking for a credit increase, I answered the offer Capital One was sending for their Savor ONE card. I had excellent payment history and my current card was always back at zero. I applied and got approved for $1,000. Mostly I just use that card now to build a credit history on that line too. I never max it more than 30% because lenders urge not to and I pay the balance off as much as I can per paycheck. I don’t ever wait for the statement. That’s when the most interest is charged and adds to your balance quickly.

For the first year, that was enough to boost my score into the 700s and teter on to the brink of 720 which is considered “good” credit to lenders versus fair below that mark. If you’re hoping to buy a home, get qualified for a good loan program that saves you money, and a better interest rate, you need to be at 750 at least. If you’re hovering at 750-760 keep it there and don’t let it dip below. If you’re at least there you’re in the sweet spot for mortgage lenders. If you’re even better, then of course, your rate and monthly payment will ususally be better. That’s my goal now is to keep working on my credit, age of credit matters too, so another few months of excellent payment history can push me to that mark. Some lenders like to see a third credit line with a solid payment history so I might do that next year if need be or at least wait a few more months. I don’t want to sabotage my progress by looking wreckless and opening all these credit lines at once. Slow and steady proves your quality as a lending candidate.

If you do have a car loan or mortgage in your name already, cosigning is fine, then you’re in good shape in terms of credit history so long as you’re making the payments on time every single month. Never miss a payment because that can hurt you more than you know, especially if it were in the last year. Be on time!! It’s so important and do not make partial payments. It’s so important to live a bit below your means, or don’t open credit you can’t afford. Keep the card unused but open. Don’t charge what you can’t pay back. It will hurt you worse than having no credit at all so don’t do it.

The biggest factors for your credit score, are credit utilization, which is one third. Of all your combined limits and debt, are you using more than 30% of those combined limits at any given time? You’re hurting your score. Almost one third of your score is utilization which is how much you CHARGE, not owe. If you use most of your credit limit per month to “get miles” and “rewards” you’re killing yourself. In those cases, it’s actually better to ask for a credit line increase BUT DON’T USE IT so your actual usage charged every month is low. For example: If you charge about $3,000 per month and put everything on that credit card, your limit needs to be at least $10,000 so your usuage is never more than 30% of your expenditures. If you have a $5,000 credit card, run it up every month but pay it off every month, it still shows lenders you charge $60,000 a year which is INSANE. We don’t look at whether you’re buying essentials or not. We look at, “this applicant spends every dollar of credit they have, non stop.” And that’s not good. Divide your total spending by your total credit limit and that’s your percentage. It should be under .3 which is 30%. If anything is more than that, even .35 or something, slow down your spending or see if you can raise your limit a bit.

The other third of your credit is the payment history of course. Always pay something more than the minimum balance, charge less than 30% of your credit limit, NEVER be late, never miss payments, never make partial payments or less than the minimum due, don’t miss payments so your utilities report you to the credit bureaus or you’re really in trouble, and don’t open credit everywhere. Three is enough and remember that includes mortgages and car payments (unless leased) so be very good at paying those on time, every time. The rest of your credit score is time of credit, so how long you have proven to be an excellent manager of your finances, how long the credit line has been open, older is better, and what the credit is. Those are about 3/4 of your score right there so if you can master all of the above, you probably have a score over 750 or on its way. Just keep going and keep it steady.

If you’re planning to buy a home in the next 2 years or less, don’t finance ANYTHING. Nowadays this includes online payment plans, pay as you go, buy now pay later, etc. Don’t add monthly payments because those affect your DTI which hurts your score and lending chances, but also adds more bills to you which is never good for lenders to see and certainly not your bank account. It shows a spending habit too. To see everything in your name get a free credit profile that’s most accurate at http://www.annualcreditreport.com for the report. If you need a score, Experian is the closest to accurate and current. They have free credit monitoring and paid plans if you need more help building credit.