How to Build Credit From Scratch

How does a credit score start when you have no history?

About 7 million American adults had no credit file at all (CFPB’s latest estimate: December 2020 data, published June 2025), and roughly 25 million more had a file too thin or too old to score. With no file, the system has simply never seen you. (More: About 7 Million US Adults Are Credit Invisible. New to the country? Start here: Building Credit as a Newcomer to the US.)

Your FICO score runs from 300 to 850 and is built from five factors; below are FICO’s published weights, and myFICO says the importance of these categories may vary from one person to another (for a deeper look at where each range falls and what counts as a good score, see our companion explainer):

• Payment history — 35% (do you pay on time?)
• Amounts owed — 30% (including utilization: how much of your limit you’re using)
• Length of history — 15% (how old your accounts are)
• New credit — 10% (recent applications)
• Credit mix — 10% (cards vs. loans)

Two factors carry the most weight: paying on time (35%) and keeping your balance low (30%).

One key fact: for a first FICO score, FICO needs at least one account open six months or more and one reported in the past six months; Equifax says VantageScore 4.0 can generate a score with as little as one month of credit history. So the clock starts the day you open your first account.

Do I need a US bank account before I build credit?

A checking account doesn’t build credit by itself, since credit reports typically leave out checking history, but autopay and some secured-card deposits draw on it.

The CFPB says Experian, Equifax and TransUnion "typically do not include information about your checking account or check-writing history in traditional credit reports." Still, several steps below run through one. Autopay, the first of the habits below, takes payments straight from your checking account. A secured card’s deposit may have to come from one too: Capital One says its Platinum Secured deposits must be "funded through an electronic funds transfer from a bank account" (read October 17, 2026). In the FDIC’s 2023 survey, 4.2% of US households had no bank or credit union account. The two most cited main reasons were not having enough money for minimum balances and not trusting banks.

What ID will the bank ask for? Under the federal customer-ID rule, a bank or credit union "must obtain, at a minimum," your name, date of birth, address and an identification number "prior to opening an account." For a "non-U.S. person" (in the rule, an individual who isn’t "A United States citizen"), the number can be "one or more of the following: A taxpayer identification number; passport number and country of issuance; alien identification card number; or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard" (31 CFR 1020.220; 1010.100). That’s what a bank may accept, not what it must, so ask which IDs it takes. The rule also lets a bank’s procedures cover opening an account "for a customer that has applied for, but has not received, a taxpayer identification number." Since mid-2026, federal guidance lets banks and credit unions treat an ITIN used instead of an SSN as a reason for extra checks (Executive Order 14406, May 19, 2026; FinCEN advisory FIN-2026-A002, issued with the FDIC, OCC and NCUA, June 5, 2026), so expect more questions or document requests.

How do I keep it free or cheap? Before you open an account, ask for its account disclosures: banks and credit unions must give them to you on request (Regulation DD; NCUA rule). They list the account’s fees, monthly and closing fees among them, and any minimum balance you must keep to avoid one. Ask, too, whether a direct deposit or something else waives the monthly fee. And unless you opt in, a bank or credit union can’t charge an overdraft fee for an ATM withdrawal or a one-time debit card purchase. That rule doesn’t cover checks or automatic payments (Regulation E).

Example: Bank On, a national program, certifies accounts that meet its standards (2025–2026 edition). A certified account asks for an opening deposit of $25 or less. A monthly fee that can’t be waived is capped at $5: at most $60 a year ($5 × 12). A fee that can be waived is capped at $10, with at least two ways to waive it with a single transaction, such as a direct deposit or a debit card purchase. Miss the waiver every month and you pay at most $120 a year ($10 × 12). The standards also allow no overdraft or nonsufficient-funds fees and no fee to close the account. Bank On lists them by state at joinbankon.org/accounts.

Is my money safe there? FDIC insurance "covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category" (FDIC), and the FDIC’s BankFind shows whether a bank is insured. An app that isn’t a bank is a different case: the FDIC says "FDIC deposit insurance doesn’t cover default or bankruptcy of any non-FDIC-insured institution." Federal share insurance covers up to $250,000 at all federal credit unions and most state-chartered ones (NCUA). A credit union is a not-for-profit owned by its members. To join, you need to fit its "field of membership," and "Many credit unions serve anyone that lives, works, worships or attends school in a particular geographic area" (MyCreditUnion.gov).

What if a bank turns me down? Banks and credit unions report problems, such as an unpaid negative balance on an account they closed or suspected fraud, to checking account reporting companies like Chex Systems and Early Warning Services. The debt from a negative closing balance is "sometimes passed on to debt collectors," the CFPB adds, and a collection reported to the three bureaus "would affect your credit report and score." If a bank turns you down because of a checking account report, its notice must name the company, and you can get a free copy. You can also get one free every 12 months. Dispute anything wrong with the company and with the bank that reported it. Then ask about lower-risk accounts designed to prevent overdrafts: the CFPB says "you may be able to qualify for one of these products even if you were recently denied for another product." If not, it suggests trying another bank or credit union (CFPB).

Account-opening bonuses: worth it for you? Some banks and credit unions offer a bonus for opening an account. The disclosures must state it, when it’s paid and "any minimum balance and time requirements to obtain the bonus" (Regulation DD; the NCUA rule says the same). Count what can eat it:

• a monthly fee in any month you miss the waiver;
• a fee to close the account, which the disclosures must list;
• a new entry in your bank-history file: Chex Systems "Collects and reports data on checking account applications, openings, and closures," says its entry on the CFPB’s list;
• a look at your regular credit reports, which some banks and credit unions also use (CFPB), so ask whether it’s a hard inquiry;
• taxes: see IRS Publication 550 or a VITA site (free tax help for people who qualify).

Skip bonuses for now if this would be your first US account, if you have no cushion for the required balance, or if you’ve had an overdraft you couldn’t repay. Your first account’s job is to stay open and in good standing.

What can I do today?

• If you don’t have a US account yet: ask one bank or credit union for the account disclosures of its most basic checking account. Write down the monthly fee and how to waive it, the minimum balance, and any fee to close the account.
• If a bank turned you down: ask which reporting company it used, then request your free report from that company (the CFPB’s list).

What can I start with if I have no credit history?

The CFPB names secured cards, credit-builder loans and store cards as ways to start building credit, and says prepaid cards and payday loans don’t help you build a credit history.

1. A secured credit card. You put down a refundable deposit, and in most cases your limit equals it: a $200 deposit usually gets you a $200 limit, Experian says. Some cards ask less. For its Platinum Secured card, Capital One lists a $49, $99 or $200 deposit for a starting line of at least $200, a $0 annual fee, and reporting to the three major credit bureaus (read October 17, 2026). myFICO says FICO Scores look at secured cards the same as any credit card. Use the card for one small recurring bill, such as a streaming service, and pay the full statement balance every month. The deposit typically comes back if the issuer moves you to a regular card, or when you close the account and pay the balance in full, Experian says; Capital One lists both ways for this card. Some issuers offer the move and others make you ask, so ask your issuer how its review works.

2. Become an authorized user. Ask a family member with an old, well-managed card to add you as an authorized user. Their account’s age and on-time history can appear on your report. Look for an account with on-time payments and a low balance compared with its limit: myFICO says the primary cardholder’s missed payments or high utilization could hurt your FICO Score too, that you aren’t legally responsible for the debt, and that in recent versions of the score, authorized-user accounts have less impact than accounts in your own name. Not every issuer reports authorized-user history, so ask the issuer whether it reports authorized users. Some say so on their own pages (read October 17, 2026): Capital One says issuers "aren’t required to report an authorized user’s activity to the three major credit bureaus. Capital One does" (Capital One); Chase says it "provides account information to the credit reporting agencies for all account users" (Chase) but "does not report the authorized user credit history of minors" (Chase article); Citi’s card agreement says "We report information about this Account to Consumer Reporting Agencies in the Authorized User’s name" (Citi), and Bank of America’s says the account "may appear on any Authorized User’s consumer report" (Bank of America); American Express says it reports an Additional Card Member (its name for an authorized user) "when they are 18 or older" (Amex FAQ, read October 17, 2026) — verify before relying on it. (Newcomer-friendly walkthrough: Starting From Zero: The US Credit Guide Nobody Gave You.)

3. A credit-builder loan. The lender holds the money while you repay it in small payments, usually over six to 24 months, and you get it at the end; the CFPB says the payments are reported to the credit bureaus. In a CFPB-funded study, it worked better for people who started with no existing debt. For people who already had loans, scores fell slightly on average and late payments on their other loans went up, so count the new monthly payment before you add one.

4. Get rent and bills reported. Rent seldom appears on credit reports because few landlords report it, Experian says. Your landlord can enroll in a rent-reporting service, or you can sign up for a paid one. Experian Boost is free and adds bills you pay from a linked bank account or card, such as phone, utilities, insurance, streaming and some online rent payments, to your Experian credit file. Experian says it can help if you meet FICO’s minimum requirements, that some people’s scores stay the same or go down, and that not all lenders use Experian credit files or scores that Experian Boost affects.

5. A store card or a card for beginners. The CFPB says stores and gas stations often offer cards with a relatively low credit limit. myFICO says some cards with limited features may be open to you without a credit history if you meet other requirements, such as income, but cards for beginners may have high interest rates. Same habits: a small balance, paid in full.

What should I do first?

• If you have a checking account: ask one bank or credit union about its secured card or credit-builder loan. Does it report to all three bureaus? How much money goes in, and when do you get it back? Is there an annual or monthly fee?
• If someone you trust offers to add you to their card: ask that card’s issuer whether it reports authorized users, and check that the account is paid on time and carries a low balance.

Which habits build a score, and how long does it take?

Autopay the full statement balance from your checking account. Payment history is about 35% of a FICO score in FICO’s published weights, and a single payment that’s 30 days late can drop your score and stay on your report for up to 7 years. If your account can’t always cover the full balance, autopay at least the minimum as a safety net and pay the rest by the due date.

Keep your balance low — under about 10% of your limit. Utilization is an important part of the amounts-owed category (about 30% of a FICO score in FICO’s published weights), and "under 30%" is not actually good — under 10% is the goal. Issuers generally report to the bureaus once a month, often shortly after the billing cycle ends. So the bureaus may see your statement balance even if you pay it in full later (Experian). Paying before the statement closes might help lower the balance the bureaus see, Experian says.

Get a first card with no annual fee, and keep it open. Length of history is about 15% of a FICO score in FICO’s published weights, and it counts the age of your oldest account (myFICO). With no annual fee, you don’t pay just to keep the card open.

Don’t apply for everything at once. Applying for a card or loan usually means a hard inquiry: for most people, one more inquiry takes less than five points off their FICO Scores, and FICO counts it for a year, though it can stay on your report for up to two years (myFICO). When you’re starting out: one card at a time.

Example: Maya opens a secured card with a $200 deposit and a $200 limit on March 2.

• Her $15 phone bill goes on the card each month: 7.5% of the limit ($15 ÷ $200), under the 10% target we teach. A $60 month would be 30%.
• She autopays the full statement balance from her checking account, and her issuer reports the account to the bureaus about once a month.
• On September 2 the card turns six months old. From that day her file can meet FICO’s minimum: an account open six months or more and one reported in the past six months. Meeting it says nothing about what her score will be.

(When a first score can appear, and what no rule sets: Your Credit Timeline: What to Expect and When.)

Where do people go wrong?

• High-fee cards. In a 2015 case, the CFPB described cards with a $300 limit and a $75 upfront fee, a quarter of the line on day one. Read the card's pricing table first, and look for a $0 annual fee and no monthly fee.
• Carrying a balance "to build credit." You don’t need to: the CFPB says paying off your balance every month is one of the factors that can help your scores, and on most cards it also means no interest on purchases (cash advances are generally charged interest from the day you take one). (More myths: 11 Things Everyone Gets Wrong About Credit.)
• Closing your first card. myFICO says closing a card could wipe out some of your available credit and push your utilization up, and that canceling a card won’t improve your FICO Scores. A closed account’s age may still count while it stays on your report, and the bureaus often remove closed accounts in good standing after around 10 years.
• Opening several cards at once. myFICO says opening several new accounts in a short time represents greater risk, especially for people who don’t have a long credit history.
• Paying for a quick score jump. Anyone promising to add 100 points to your score overnight is selling you something: the CFPB says "You generally cannot have negative information removed from your credit report if it is accurate." (Before you pay anyone to help with your credit: Credit Myths, Scams & What’s Actually True.)
• Never checking your reports. You can get all three free every week at AnnualCreditReport.com (FTC); check that your new account appears and that nothing on it is wrong.

If you were denied

Read the notice first. A lender has to tell you what it decided within 30 days after it receives your completed application. If it turns you down, its notice must either list the specific reasons or tell you how to get them: if you ask within 60 days of the notice, the lender has 30 days to give you the reasons (Regulation B, 12 CFR 1002.9). The CFPB calls this an adverse action notice (CFPB). Regulation B’s sample notice lists reasons such as "No credit file" and "Limited credit experience" (Regulation B, Appendix C). If the notice lists a phone number for the lender, you can call it to ask about the decision; the lender decides.

If your credit report was used, the lender must name the bureau. If the decision was based even partly on your credit report, the lender must also give you the name, address and phone number of the credit bureau that supplied it, and tell you that the bureau didn’t make the decision and can’t give you the reasons. If it used a credit score, it must also give you that score and the key factors that hurt it (15 U.S.C. 1681m). You can get a free copy of that report from that bureau if you ask within 60 days of getting the notice (FTC).

Check that report, and dispute what’s wrong. If something in it is wrong or incomplete, you can dispute it for free with the credit bureau and with the company that reported it (FTC; CFPB: how to dispute an error).

Before you apply again, work on the reasons the notice gave you. If they were "No credit file" or "Limited credit experience", that’s what the steps above are for. (Rules and pages above checked October 20, 2026.)