Build Your Credit – What are the Best Options? Credit History to build your credit in US Home Loan News


Building credit is essential for most people. Whether it is to buy a car or a first home, applying for a credit card, or other finance package, there is a need to have a credit history.

Luckily, there are plenty of different steps that can be taken to build credit, such as a secured credit card, a credit-builder loan or being authorized to use someone else’s card.

In order to successfully obtain a FICO score (one of the credit bureaus) it is necessary to have at least one active account that has been reported to the credit bureaus for a period of up to six months.

Let’s take a look at four of the options to establish better credit standing:

Secured credit card

One of the best methods to start building credit from scratch is to apply for a secured credit card. This is much like a credit card, but you will personally deposit an upfront cash amount on the card. The amount deposited on the card is basically your credit limit.

A secured credit card is used in store or online like a traditional credit card. You can buy your everyday things as and when needed. But, there is still a need to make a minimum payment on the due date. Interest is likely to be applied in the event of not paying down the credit balance in full. Your initial personal deposit is held on account and used in the event of missing a payment.

Provided the account is in good standing, the cash deposit is refunded if you decide to close the account in the future.

The secured credit card should be seen as a short-term solution to build credit history, which can be used in the future to apply for a traditional credit card or loan.


Credit Builder Loan

The sole purpose of the credit builder loan is to help an individual to build their personal credit history. In most cases, the money borrowed is kept by the lender and not released to the borrower until the full amount of the loan is paid.

It can essentially be seen as a type of forced savings account. The monthly payment on the loan is reported to the various credit agencies, which helps to achieve the desired credit rating.

Community banks and credit unions are more likely to offer this type of loan.



The option to use a co-signer can significantly increase the likelihood of being approved for an unsecured credit card or loan. However, it is important that both parties clearly know what is involved. In the event of the borrower defaulting on a payment, it will be the co-signers responsibility to cover the full amount outstanding on the debt.


Authorized Use

A very appealing option to start building credit for many is simply to be added as an authorized user on a family member’s credit card. The authorized user will have the option to use the card and build a credit history in the process. However, they are not legally obligated to cover the cost of any charges on the account.

With patience and a little effort with good money management, it is possible to start building a credit score within a period of six months.