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How To Build Your Credit


How many times do you think you hear about credit in a day? There’s TV ads, radio spots, billboards, and even co-workers! Credit is part of every day life and you simply can’t escape it! While I wish I could say that credit is meaningless if you pay cash for everything, I simply can’t.

Credit has become so ingrained in our society that it might even keep you from getting a job! That’s right, even Human Resources cares about your credit score. According to them, if you have a good credit score, you are more trustworthy and would make for a better employee. Pretty crazy, but it’s true! Let’s figure out how to build your credit score.

What Goes Into Your Credit Score?

According to, your credit score is affected by payment history, amounts owed, length of credit history, new credit, and the types of credit used.

So, if you currently have a student loan, a car payment, utility bills, or a cell phone bill, you are currently building your credit already! I have a few friends that are very wise financially – meaning, they currently don’t have any credit cards, they haven’t needed to apply for student loans, they paid cash for their cars, and they currently live at home, so they don’t need to pay for utilities. This means that the only credit they’re building is with their cell phone bill (that is, if their parents aren’t paying for it). In other words, they are building little to no credit even into their early 20s.

How to Build Your Credit

So, what do I advise that my creditless friends do to earn a little bit of credit? One of the best ways is to get a credit card and spend responsibly with it. However, if they have absolutely no credit, sometimes credit cards are even tough to get. So what do you do then? Go for the prepaid credit card.

With a prepaid credit card, you’ll simply treat it like a checking account with a debt card. In other words, you’ll load your card with some money, and then you’ll only be able to spend the amount that’s deposited onto your card. It’s true that this card doesn’t work exactly like a credit card, but it still builds your credit score! With consistent use, you should soon see your credit score rise up and up in the near future.

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AUTHOR Derek Sall

Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.

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