6 Surprising Ways New Cardholders Can Build Credit

You’re not born with a credit history. Much like you have to spend money to make money, you need to borrow money to prove you’re good at borrowing (and paying back your debts).

In fact, according to Nationwide, credit scores help insurance companies predict future losses. So, how can you start your credit-building journey? Here are ways new cardholders can build credit.

A secured credit card is a great way to build credit from scratch. It works just like an unsecured card, except that you make a security deposit that is equal to the amount of the credit limit.

Get a secured credit card

Before applying for a secured card, make sure the lender reports your usage to the three credit bureaus–Equifax, Experian and TransUnion. If it doesn't, you won't build credit.

Make timely payments

Once you have your first credit card–be it secured or unsecured– focus on paying your bill in full on time, every time.

Payment history is a big component of your credit score. Each month you pay your full balance on time, you’re proving your creditworthiness.

Use your card often

The more you use your card, the better. The key, though, is to use it smartly. Pick up the check when you're out to dinner with friends, knowing they’ll reimburse you for their meals.

Just remember: Pay the bill in full, every month. You should also never max out your card just to take a vacation or buy something you can't afford.

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