How to Build Credit in 6 Steps



Through careful planning, anyone can be on the path to home ownership within 2 years. If you need to build credit , let's get the ball rolling.


Get a Secured Card


Secured Cards are temporary tools used to build new credit from scratch or rebuild credit after a span of bad credit, bankruptcy, foreclosure, and payment delinquencies.


You'll use a secured card like any other credit card. The main difference is that a secured card is backed by a cash deposit that you make to borrow against. It's basically borrowing your own money over and over again while the credit card company reports your payments to the credit bureaus so that you can build up your credit and increase your score.


Once you've managed your secured credit card well and made on time payments for a period of time, most credit card companies will transition your secured card to a regular unsecured credit card.


Get a Credit Builder Loan


This is pretty brilliant. A credit-builder loan's sole purpose is to help people build credit. A credit builder loan is sort of like a forced savings plan.


Here's how it typically works: The money you borrow is held by the lender in an account and not released to you until the loan is repaid. Your payments are reported to credit bureaus. These loans are most often offered by credit unions or community banks.


Get Credit for the Bills You Pay


This is another awesome way to build up your credit score that a lot of people don't know about. Experian offers a service called Experian Boost, which is a way to have your cell phone and utility bills reflected in your Experian credit report. The only downside is that the service is limited only to your credit report with Experian — and any credit scores calculated on it.


Get Credit for the Rent You Pay


Yes! You heard it right. As a smart renter, you're paying your rent on time every month, why not get credit for it.


Rent-reporting services such as RentTrack, Rental Kharma, and Rent Reporters uses the rent you are already paying and puts it on your credit report, helping you build a positive history of on-time payments. You can't report rent payments yourself, so you'll need to select a rent-reporting company to do it for you. Some are free of charge and others charge a fee.


You'll need to know which credit bureaus the company reports to. All three major credit bureaus — Experian, TransUnion and Equifax — do include rent payment information in credit reports if they receive it. For example:


  • Rent Track reports to Experian, TransUnion and Equifax

  • Rental Kharma reports to Trans Union

  • Rent Reporters reports to TransUnion and Equifax


Not every credit score calculation, such as the FICO Score, takes these payments into account, but using this type of service may be enough to get a loan or credit card that firmly establishes your credit history for all lenders.


Practice Good Credit Habits


You know the basics, but it's worth repeating. Good credit habits will help you build or repair your credit over time.


  • Have a clean checking account (no overdrafts)

  • Make 100% of your payment on time

  • Establish your own credit

  • Correct errors on your reports when you spot them

  • Keep your credit utilization rate low (under 30%)


Check Your Credit Scores and Reports


Check your credit report and scores regularly. You’ll want to monitor both to watch for errors and see how your credit-building efforts pay off.

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This has been a quick tip by LandlordBreakup.com, the website for smart renters. If you're a renter who is curious about how you can turn your rent payment into a mortgage payment, check out our home buying course and home ownership plan for renters. Check out the course.


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