How to Start Building Credit

Quick Answer

You can start building credit by opening a credit card account, becoming an authorized user or taking out a small personal loan or student loan in your name.
Happy Young Couple Sitting On Floor Looking Up While Dreaming Their New Home And Furnishing.
Dear Experian,

I'm currently a college student. How do I start building credit? Is having a credit card enough to establish credit while being a college student?


Dear KMA,

Building a solid credit history while still in college can be challenging, but will be a great benefit to you once you graduate. So it's good that you are already thinking about it.

Your credit will play a big role when it comes time to apply for your first apartment, cellphone or electric bill in your name. Your credit history may also determine whether you are asked to pay additional security deposits or fees on your accounts.

There are several ways you can start building a credit history while still in college. Some of the most common ways are:

  • Opening a credit card account
  • Asking a parent or other family member to add you to one of their credit card accounts as an authorized user
  • Taking out a small personal loan or student loan in your name

Let's go over all three of these options, as well as other steps you can take to start building your credit.

A Credit Card Is a Good Way to Begin Building a Credit History

Qualifying for a credit card as a college student has become more difficult in recent years, but it's not impossible.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (or Credit CARD Act), prohibits you from getting a credit card if you are under 21, unless you are able to show that you have an independent source of income you can use to pay back any charges you make on the card. If you are unable to prove your ability to repay any charges, you will need a cosigner.

If a cosigner isn't an option, check with your bank or credit union to see if they offer a secured credit card.

With a secured card, you will have to put a certain amount of money down as a deposit. The amount you deposit to secure the card typically becomes your credit limit and will be used to cover the charges should you fail to make payments.

Before applying for a secured account, you may want to inquire with the card issuer to ensure your on-time payments will be reported to the consumer credit reporting agencies—Experian, TransUnion and Equifax.

If you keep your balance low and make all your payments on time, the card issuer may agree to convert the account to a traditional, unsecured account after a period of time.

Can Being Added to Someone Else's Credit Card Help Build Credit?

Another option is to ask a family member to add you as an authorized user or joint account holder on one of their credit card accounts.

In a joint account holder arrangement, both owners of the credit card are equally responsible for payments on the account. When you go this route, be aware that any late payments made on the account will affect you as well as the other joint borrower. If you are added only as an authorized user, however, you are able to use the account but will not be financially responsible for making payments.

Not all lenders report authorized user accounts to the credit reporting companies, so you may wish to check with the lender first to make sure the account will appear on your credit report once you are added.

Installment Loans Are Another Option to Build Your Credit History

If you have the means to make monthly payments, consider applying for a small loan in your name. Credit-builder loans are intended for exactly this purpose and work by depositing your loan proceeds into an account you'll gain access to once the balance is fully paid off. Be sure the lender reports payments to the credit bureaus before you take out a credit-builder loan.

If you have student loans in your name, they can also help you build credit. Although student loans typically don't require you to make payments until after you graduate, you can start making payments on the loan while you are still in school if you choose.

As with a credit card, you may need a cosigner to qualify for a personal loan. No matter what type of credit account you start out with, the important thing to remember is to make every payment on time. If you make all payments on time and keep your balances low, you will be well on your way to having a good credit history by the time you graduate.

Get Credit for Positive Cellphone and Streaming Service Payments

If you already have a cellphone, utility or streaming service account in your name, you can sign up to have those on-time payments added to your Experian credit report with Experian Boost®ø. The service is free and sign-up is quick and easy. Once the payments are added, you'll be provided with a new credit score so you can see how much it has changed.

And if you don't have an existing credit report, Experian Boost is still an option when you sign up for Experian Go™ first. Experian Go is a program that lets you create an Experian credit report and then add accounts like a cellphone or streaming service with Experian Boost—helping you begin your credit journey.

Thanks for asking.

Jennifer White, Consumer Education Specialist