Credit 101: How do I build credit?

First-Time Homebuyer

Your credit matters when buying a home. Here are some simple strategies to get it on the right path.

Wondering what you can do to improve your FICO® score if you have a limited credit history? Here are some tips for building your credit.

Pay your bills on time.

Your FICO® score is an important indicator of your credit, but VantageScore is another credit scoring model that incorporates non-credit related bills, like rent and utilities. Both FICO® and VantageScore take late payments into consideration. That’s why it’s so important to pay all your bills on time, every month. It’ll help you avoid late fees while building a good credit history.

Apply for a secured credit card.

One great option for establishing or rebuilding credit with responsible use is a secured credit card. This is just like other credit cards but requires a security deposit, which is typically the same as the credit limit.

Just as with a regular credit card, you can build credit by using it responsibly and making your payments on time. Plus, secured cards may offer rewards like travel points or cash back.

Apply for a store card.

Applying for a credit card with a major department store is another way to build credit. Stores are often more lenient in giving credit to someone with limited credit history—but the cards usually have a much higher interest rate. So if you’re able to get a store card, be sure to pay off your balance each month to avoid high interest rate charges.

Here's the bottom line.

Building a positive credit history takes time, but it can really pay off in the future. When it’s time to buy a home, finance a car, or apply for a bank loan, you’ll be glad you built a solid credit history first.