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How to Build Credit Fast With a Credit Card for the First Time – A Complete Guide

Do you want to build credit fast at a young age of 17 & 18; or as a college student? If YES, here are 50 ideas on how to build credit with a credit card for the first time.

We live in what people refer to as a ‘plastic society’ where credit card use is at the forefront of cashless transactions. The fact that credit cards offer a level of convenience that cash cannot provide make them a preferred transaction option. In addition, credit cards offer some level of protection against fraud, it is an easier way to keep track of spending, and it is equally a way to develop good credit score for future use.

But on the downside, credit cards can be easily misused. Because of the convenience it provides for online shopping, many people unwittingly run up large balances on high interest rate credit cards which they cannot afford to pay off every month without hurting their budget.

If you make your card payments late or if you skip payments entirely, it would automatically reduce your credit score thereby making it difficult for you to secure loans with good interest rates in the future. It is a fact that you cannot get a loan, mortgage or even apartment lease without evidence that you have been able to maintain good credit history.

What is Credit History?

Credit history is a record of all the financial transactions you have done over the past 10 years, more or less. It is a well-kept track record of the ability of a borrower to repay loans. Your credit history is what determines your credit score or rating.

For a person to be in a comfortable threshold as far as credit rating is concerned, such person has to have a credit score of 700 and higher in a range of 300-850, according to Fair Isaac crop (FICO) and Vantagescore ratings. This three digit number has the ability to decide whether you can get a loan or not because it represents how financially trustworthy you are to a lender.

If you have not been financially responsible, your credit score would be low (between 300 and 650), but if you have taken good care of your financial history, you can gross between 760 and above, which is considered excellent.

Some people might think that avoiding credit products keeps them on the clear, because you can’t have bad credit if you don’t use credit products in the first place. But this is an erroneous assumption; you must use credit for you to build credit history. You can’t get the attention of any financial institution without a history of prompt payment of debts.

How Does Building Credit Help You?

Your credit history is computed by analyzing the money you have borrowed, the rate at which you pay back the borrowed money, and the amount you still owe to the various financial institutions.

Giving out loans is a risk on its own, and to reduce the risk on their part, banks and other lending institutions use a person’s credit history to determine if the person is creditworthy. Even ordinary people are more likely to lend money to a trusted friend who would pay back the loan than someone who has a history of financial recklessness. Having an excellent credit history is beneficial to you in a number of ways.

  • First, you find it easier to obtain loans when you need one. If you have a poor credit score, you may be considered for loan by some lenders but you may be given a higher interest rate than normal.
  • Second, having a good credit score affects your insurance positively. In some countries, you get to pay much less on car and property insurance than someone with a bad score.
  • Third, you can easily get mortgage for an apartment with a good credit history. Additionally, renting or leasing of an apartment would also be easier for you as landlords would know that they can trust you to pay your rent as at when due.
  • Fourth, it can help you get better employment. Depending on the job, some employers would always make sure you have good credit history before offering you a job.

Building Credit With a Credit Card – Practical Steps to Take

The score attached to your credit is determined by several factors, so you may find it difficult to know where to start. One of the great places to start building credit score especially for a newbie is to use a credit card. How can that be done, you may ask? Following these few steps would help you grow your credit score with the help of your credit card.

a. Start your credit card adventure small: it is advised that if you are a new credit card user, you should start small. You can obtain a credit card that has a low limit, or you can get one that has a set amount of money. This would help you curtail your spending as you cannot go above your credit limit. In the same vein, you should endavour to keep your credit balance low. It is advisable to keep your balance under 30 percent of your card’s total limit.

b. Get a secured credit card: if you have no credit history, this is an ideal option for you. A secured credit is when you are issued a card based on the amount you already have in your account. A secured credit card is issued based on the deposit you made upfront, and as such, you cannot spend more than what you originally have in your account. The purpose of the secured credit card is to build your credit enough to qualify you for an unsecured credit card.

c. You can piggy back on another person’s card: if you have someone who is willing, and who has good credit history, they can add you as an authorized user of their credit card. In this way, you can comfortably build a credit history while enjoying access to a credit card. But you should always endavour to pay up your credit balance on time otherwise you can end up damaging the credit score of your principal.

d. Make timely payments: your credit score can only increase if you pay your bills on time. Late payments would report negatively on your score. The time you take in paying your bills is a measure of how responsible you are with finance.

e. The older the account, the better: you have to kick the habit of opening and closing accounts indiscriminately. You are in a better position to get a higher credit score if you maintain accounts for long, and you have a history of responsible credit use.

f. Utilize store cards: store cards can help you build credit if you use them responsibly. You should endavour to pay off your balances in full and on time, otherwise they end up hurting your balance.

g. If you are a student, then take advantage of student credit cards: this is another neat way to build credit with your credit card. Many banks offer students credit cards though this is a bit different from the traditional credit cards. The most important thing is that this card can help you build credit if your balance is always paid off on time and if the card is utilized appropriately.

f. Be vigilant: you should always monitor your credit report to check for errors and discrepancies. It is a fact that errors do occur sometimes in a person’s credit report and those errors if not corrected can negatively affect your report, so it is advisable to ask for your credit history from time to time. You are entitled to that information anyways.

Now when you are young and probably still in college, you might not pay attention to your credit history, but if you are able to do so and build a solid credit history at a young age of 17 or 18, it gives you an advantage in the long run because you would be able to obtain reasonable and helpful credits early in life. Here are 20 ideas to help you build credit quickly as at your eighteenth birthday.

How to Build Credit Fast for the First Time Especially When You are Young

  1. Ask Your Parents for Help

Your parents can be your first option. They are one of your best ways to build credit. They could help you achieve this when they add you as a co-user on their credit card. When they do this for you, they can monitor your activities on the card and they take on the responsibility of making all payments on the card. By this, you get credits built up in your name till you are ready to go independent.

2. Find a Co-signor

If your parents are unable to add you as a co-user, you can get a co-signer instead. Your co-signer could be your sibling or a family friend as long as they have good credit history.

You build credit this way when you piggyback on whatever score your co-signer gets. This means you must be careful about who your co-signer is because whoever you pick to sign your credit application form with you might have to take up repayment with you and if they do not perform well, they may end up hurting your credit records.

3. Check Your Credit Report Regularly

You are legally allowed to request for your credit report once a year. It would help you a lot if you make it a point to check your credit report regularly so as to keep tabs on how far you have gone, and what you need to do to make progress. Checking your credit report would also allow you to know if you have any false credit in your name.

4. Cancel False Reports

Sometimes false credit reports could be registered in your name by unknown users. It is wise and important to ensure you check such reports so you do not mar your chances of applying for credit by carrying a negative score you know nothing about. As soon as you check and you happen to find an existing score, do a cancel so that you would be able to build a positive credit score.

5. Gym Membership Card

One other idea to help you build credit quickly at a young age is by simply registering at a gym. There are a lot of gym membership programs that you can get that end up earning you a few credits. There have been cases where some people weren’t aware they got credit from a gym registration as they only got to see it when they requested for their credit reports.

6. Departmental Store Card

Getting yourself a departmental score card can also help you build credit. You can check with your favorite departmental store to see if they have any such programs. This type of card can carry a sort of loan that helps you make credit purchases. This will mean that you must pay back on time to show that you are financially responsible. It is important to ensure that the activity on this card gets seen by the credit bureau so that your activities would reflect on your credit score.

7. Gas Card

A gas card can also help you build credit. This card which you use in purchasing gas at your gas station can give you the opportunity of cash advance. The cash advance must be paid back promptly in order for you to be able to build credit with it. It is also essential that the activities on the card are reported to the credit bureau.

8. Get a Credit Card

The only way to build credit is by obtaining credit and paying back promptly, so you should not shy away from getting yourself a credit card. After you must have built enough credit, waste no time in applying for a credit card. Your activities on the credit card will help you build credit score. How you pay back and the level of responsibility you maintain while using the card tells a lot when you decide to get a mortgage or a student loan.

9. Pay Balance on Time

It is very important to pay off all loan balance on time when trying to build credit. It helps to pay off and then reapply and then payoff monthly. If you wait till after expiration or due date, it gives you a negative score and would take a negative toll on the whole aim of building good credit quickly. It will do you a lot of good to balance all loan payments such as gas card, departmental store card and telephone bills on time.

10. Pay bills on time

Making quick payments on all utilities registered to your account as at when due also helps you build credit. Electricity, internet and cable subscription bills should be sorted promptly. Don’t forget your telephone bills too as stated earlier and any other bills you might have a loan on. This is one way to show financial responsibility and this goes a long way in building good credit.

11. Set up an Automatic Repayment System

It is not unusual to forget that you have to make these payments so you could download an app on your phone that helps to remind you when it is time to pay your bills so that you don’t forget, or better still, set up an automatic payment system on your account so that direct debits are made whenever payments are due.

12. Avoid Opening Several Credit Accounts

Keeping your credit score in good shape can be achieved easily when you don’t open several accounts. Opening several accounts could lead to financial recklessness because, hey! There’s money to spend, what’s stopping you from spending it? Not being able to pay back loans you take on several accounts spoils your chances of maintaining a good credit score. You might also be tempted to take financial decisions on impulse when you run several accounts and sometimes you tend to ignore some accounts overtime.

13. Get a Secured Credit

You can also build credit at a young age when you get a secured loan or secured credit. This you can do when you have something valuable you can release as collateral to the bank or the financial institution you approach for secured credit.

For secured credit cards, the financial institution would usually require that you deposit some funds equal to your credit limit so that if you default in payment, the money can be redeemed to make up for your repayments. Getting a secured credit card is the best option for you if you are unable to get a regular credit card.

14. Open a Bank Account

Opening an account helps you build credit. This means that you can enjoy the several benefits of being an account holder which includes obtaining a loan, a credit card, account statement etc. If you run your account properly by making regular deposits and withdrawals, it shows financial responsibility which qualifies you for credits in the future. Your account statement can also show how capable you are, and it is useful for helping financial institutions make decisions when you are trying to get a loan or mortgage.

15. Use Your Card Responsibly

How you use your card also helps you build credit. You should avoid spending recklessly and only use your credit card to make important purchases. You won’t expect to build a good credit score when you accumulate huge debts on several cards. You should only spend money that you are sure of paying back within a short time.

16. Get a Student loan-: Applying for a student loan and making necessary payments as at when due would also help you build credit.

17. Get a loan

Once you have a bank account, you would be able to approach your bank for mortgage or a loan. The way you manage the bank loan helps you build good credit score. You should speak to your account officer to help you get good knowledge of whatever loan offers are available to you. I advise that you think it through properly in order to determine how you would payback, how reasonable the interest rates are and whether you can afford to payback. You should only obtain a loan if you have all of these figured out.

18. Get a Job

One important step you should consider when building credit is to get a job. You can start by getting summer jobs or part-time jobs right from high school. You must do all you can to keep your job too. Having a job helps you payback your loan, helps you stay financially responsible and most of all, helps you build credit.

It is also important to get a job that won’t affect your school grades. Earning a salary helps you pay for items in cash without putting the entire load on your credit card. You should also have a good budget plan to coordinate your expenses and avoid financial recklessness.

19. Start a Business

It is never too early to start a business. There are lots of business opportunities out there that you can take advantage of especially online based businesses. Having a successful business with a business credit card can do wonders for your credit score because it builds your financial credibility.

In conclusion, you cannot afford to ignore your credit score because it affects your financial life in a very significant way, so the earlier you start, the better for you when you are older and start needing credits to finance your projects, start a family or get a personal house.