Credit scores: start from zero
Your credit history doesn't move with you. How to start one, what moves your score, and how long it takes.
4 min read
If you are new to the US, you may hear that you have “no credit”. This is not a judgment about you. US credit is a record of borrowing inside the US only. Yours is simply empty.
No credit is not bad credit. Lenders just have nothing to read yet. You can usually fix that in about 6 months.
Ways to start
- A secured credit card. You leave a deposit, often $50 to $300. That becomes your limit. Pay in full every month, and most banks return the deposit later.
- Authorized user. A family member adds you to their card. Pick someone who always pays on time, because their history becomes part of yours.
- A credit-builder loan, often from a credit union. You pay into a locked savings account, then get the money at the end.
- Rent and utility reporting. Some services add the rent and bills you already pay to your credit file.
What moves your score
Your score comes from 5 things. The first 2 make up about two-thirds of it.
- 35% Paying on timeOne payment 30 days late can stay on your report for 7 years.
- 30% How much of your limit you useKeep it under 30%, and under 10% if you can.
- 15% How long you have had creditKeep your oldest card open.
- 10% New applicationsEach one can lower your score a little for a few months.
- 10% Types of creditYou can ignore this one.
You do not need to pay interest to build credit. This is a common and costly myth. Pay the full balance every month. Your score grows from on-time payments, not from interest.
If you already owe money on a card
Card interest is about 22% a year. Paying it off is like earning 22%, guaranteed. No investment can promise that.
- Pay at least the minimum on every card, every month, so nothing is late.
- Put every extra dollar on the card with the highest interest rate.
- When that card is paid off, move to the next highest.
- Stop using the cards until the balances are gone.
How long it takes
- 1Month 0Open a secured card, or become an authorized user.
- 2About 6 monthsYou usually have a credit score.
- 3About 2 yearsWith on-time payments, your score can be strong.
Set up autopay for the full balance, so one forgotten date can't undo your work.
Check your reports for free
You can get free credit reports from all 3 credit bureaus at AnnualCreditReport.com. Look for accounts that aren't yours. Mistakes are more common if your name is common or your tax ID is new.