Building Your Credit From Scratch

Building Your Credit from Scratch


When you are little, you typically don’t have much to worry about. Once you get into high school, words like “college” and “work” get tossed into a conversation every now and then. You are also going to find out that you need some “stuff” like a car and other stuff. If you don’t have the cash, you need credit and that has to be built.

Yes, credit is not tangible so how can you build it? It is possible and it will take time. Most importantly, you must stay on track and be responsible with your finances otherwise there’s no point in even trying.

Getting Started

There are a number of things you can do to begin to build your credit from scratch. Probably the easiest is to get yourself a credit card for your favorite store. You will find that most stores offer their own credit cards and applying for one generally doesn’t take very long.

Obtaining a credit card from places like Target or another large chain is a great start. This is because you can buy a lot of different things from clothes to food all with one card. Another type of card you might consider is a gas card. The larger gas companies like Chevron and even some gas marts have their own credit cards that you can apply for.

Another option you should consider is obtaining a secured credit card. This is a unique type of credit card that has a very tight control on your spending. This is because your limit is based on how much you give as a deposit. For example, if your deposit is $300.00 then your spending limit on the secured card is $300.00.

If you are a student, you may even want to consider this option. Many credit card companies offer a card just for students. The credit card industry is very aware that students don’t have much cash but tend to need things as the school year progresses.

What to Look For

Since you probably don’t have much money to begin with, you need to shop around for the best deal. Try to find one that offers a low interest rate and zero fees if at all possible. Your goal is to find a card that best suits your personal needs.

If you like the idea of getting rewarded for making purchases, my words of wisdom to you are: beware! Sure it’s fun to get cash back or extra points which you can use to buy something in the future, but will this entice you to spend more than necessary?

Building Your Credit from Scratch

Probably the most important thing to remember when building your credit is that the money you borrow (you charged), you have to pay back and on time. It’s also good to know what your monthly payment amount would be for various balances.

This way, you have an idea of how much you can charge and how much you will need to pay when your bill is due.

Start slow and test your financial skills. If your finances allow, charge only what you can pay off in one payment for the first several purchases. This will keep your purchases at a minimum, but you are still using the card, keeping a zero balance and most importantly creating/building your credit. And remember, just because it’s on sale doesn’t mean you need to buy it!! Good luck!

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