Building credit from zero

If you've never had credit — you're 18, or new to the US, or you've lived debt-free by choice — starting from zero is a chicken-and-egg problem. Lenders want to see a track record before they extend credit, but you can't build a track record without credit. Here's how to break the loop.

Option 1: secured credit card

A secured card works like a normal credit card except you put down a deposit (usually $200–$500) that becomes your credit limit. The issuer reports to the credit bureaus like any other card. After 6–12 months of on-time payments, most issuers will upgrade you to an unsecured card and return your deposit.

Option 2: become an authorized user

If a family member has a credit card with a long history and good standing, being added as an authorized user inherits that account's history on your credit file. You don't even need to touch the physical card. This can give you instant 'age' on your credit profile.

Option 3: credit-builder loans

A credit-builder loan is a small installment loan from a credit union or online lender. You make monthly payments, but instead of receiving the money upfront, the lender holds it in a savings account and releases it when you've paid it off. You build payment history and end up with a small chunk of savings.