How to build credit from scratch or improve your credit score

Building credit doesn’t have to be complicated. It comes down to a few simple habits you stick with over time. Whether you’re starting from scratch or working to improve your score, the basics are similar.

The first step is understanding how credit scores work and what helps them improve. Here’s what to know.

How your credit score is calculated

Your credit score is based on 5 main factors, with payment history and credit utilization playing the biggest role.

At its core, your score reflects how well you manage the money you borrow over time. Scores typically range from 300 to 850. Lower scores can make it harder to qualify for credit, while higher scores show you’ve managed credit well.

Here’s what makes up your credit score:

1. Payment history. This is the most important factor. It shows whether you’ve paid your bills on time. Late or missed payments can stay on your credit report for years.
2. Credit utilization. This is how much of your available credit you’re using. For example, if you have a $1,000 limit and a $300 balance, your utilization is 30%. Lower utilization generally signals responsible credit use.
3. Length of credit history. This looks at how long your accounts have been open. A longer history can help your credit score, which is why holding onto older accounts often works in your favor.
4. Credit mix. This refers to the types of credit you have, such as credit cards and auto or home loans. Having a mix can show lenders you can handle different kinds of credit.
5. Credit inquiries. This reflects how often and how recently you’ve applied for credit. Too many applications in a short period can signal higher risk to lenders. 

How long does it take to build credit?

Building a credit score from scratch typically takes about 6 months. From there, your score can continue to improve over time as you develop strong, consistent habits.

Actions such as making on-time payments can start to help within a few months. Bigger improvements often take longer, especially if you’re rebuilding from a lower score. That’s because some parts of your score, such as the length of your credit history, simply take time.

9 ways to build credit from scratch

Once you understand how your score works, you can start putting that knowledge into action. These strategies can help you build or strengthen your credit over time.

1. Apply for a secured credit card.

   A secured credit card is one of the easiest ways to get started if you don’t have a credit history. You make a refundable deposit upfront, which usually becomes your credit limit. From there, you can use the card just like a regular credit card by making purchases and paying your balance. Many secured cards offer a path to upgrade to a regular card after a period of responsible use.

2. Become an authorized user on an account.

   If someone you trust, like a spouse, parent or close family member, has a credit card with a strong payment history, they may be able to add you as an authorized user. That account history can appear on your credit report and help you build credit if the account is managed well.

3. Make on-time payments.

   Payment history is the single biggest factor in your credit score, meaning this habit matters most. Late or missed payments can stay on your credit report for years, while consistent on-time payments build a track record lenders can rely on. This applies to all types of credit, including credit cards, mortgages and auto loans. Even one missed payment can have a lasting effect.

4. Keep your credit utilization rate below 30%.

   Credit utilization is how much of your available credit you’re using, and it’s the second-biggest factor in your score. A common guideline is to stay below 30% of your total limit: for example, keeping a balance below $300 on a card with a $1,000 limit. Using less of your available credit generally looks better to lenders.

5. Borrow or charge only what you can afford to pay back.

   It’s easy to think of credit as extra spending power, but borrowing more than you can repay can work against you. Missed payments and high balances can hurt your score, which is why it helps to spend well below your credit limit. If you can't afford to buy something without relying on credit, it may be worth waiting.

6. Monitor your credit report. 

   Checking your credit report helps you catch errors, spot signs of fraud and track your progress over time. Aim to review it at least once a year, or more often if you’re building credit. You can request free reports from the 3 major credit bureaus, Equifax®, TransUnion® and Experian®, at AnnualCreditReport.com®.^{Footnote [1]} You can also use tools such as Navy Federal’s Mission: Credit Confidence® Dashboard to view your VantageScore® and see how your actions can affect it.

7. Keep old credit cards open. 

   Closing a credit card might seem like a simple way to clean up your finances, but it can work against your score. It lowers your total available credit, which can raise your utilization rate. For example, carrying a $300 balance on a $1,000 limit is 30%, but closing a card with a $1,000 limit could push that higher. It can also reduce the average length of your credit history over time. Unless a card has a high annual fee, even if you rarely use it, keeping it open is often the better choice.

8. Consolidate debt.

   Debt consolidation combines multiple debts into one monthly payment, often with a personal loan or a balance transfer credit card. People usually do this to make payments easier to manage or to try to lower their interest rate, and it can affect your credit. For example, paying down balances can help lower your credit utilization, which may benefit your score. However, applying for a new loan or credit card will result in a credit inquiry, which will temporarily affect your credit score. Think through the pros and cons based on your situation.

9. Diversify your credit mix with different types of loans.

   Credit mix looks at the variety of credit types on your report, like credit cards, auto loans and mortgages. Having a mix can reflect positively on your score. That said, it carries the least weight of the 5 scoring factors and tends to develop naturally as your financial life grows. It’s generally not worth opening new accounts solely to diversify your mix.

Common credit pitfalls to avoid

These credit missteps are common and easier to avoid once you know what to watch for.

Not reading your card’s terms and conditions

Every credit card comes with terms that cover interest rates, fees and grace periods, and overlooking them can lead to surprises. Taking a few minutes to review them before you start using your card helps you understand how it works and what to expect.

Only paying the minimum balance

Paying the minimum keeps your account in good standing, but interest continues building on the remaining balance. Even a little extra can help you reduce debt faster and lower interest costs.

Applying for too many credit cards at once

Each credit application typically creates a hard inquiry on your credit report, and several in a short period can signal risk to lenders. Spacing out applications gives your credit profile time to reflect your history.

Taking out big cash advances

Cash advances let you withdraw cash against your credit limit, but they often come with higher interest rates and fees than regular purchases. Interest usually starts right away, with no grace period. Treat them as a last resort.

Relying on your credit card for emergencies

A credit card can help in a pinch, but using it as your main fallback can quickly increase your balance and utilization. Having a small emergency fund gives you more flexibility when unexpected expenses come up.

Not monitoring your credit regularly

You might assume everything is fine, but errors and signs of fraud can go unnoticed. Checking your credit report every few months helps you catch issues early and stay on track.

Building credit in special situations

Building credit in the military

Military life comes with financial considerations such as frequent moves, deployments and benefits that can be easy to overlook. A couple of protections are especially worth knowing:

Use SCRA interest rate protections.

The Servicemembers Civil Relief Act (SCRA) caps interest rates at 6% on most debts you took on before Active Duty, including credit cards, auto loans and personal loans. Navy Federal goes further by capping eligible pre-Active Duty debt at 4%. This protection only applies to debt you had before your service began.

Safeguard your credit during deployments.

Deployments can make it harder to keep tabs on your credit, especially with limited access to phone or internet. Before you leave, set up autopay to prevent missed payments. You may also want to have a trusted person, such as a spouse or family member, who knows how to access your accounts if needed.  

Managing credit as a couple

Building credit as a couple is different from building credit on your own. Your scores don’t merge when you get married. You and your spouse each keep separate credit histories, even on joint accounts. This can affect how you build credit together and manage your individual scores. 

How a partner’s credit affects joint loans

When you apply together for a loan, such as a mortgage or an auto loan, lenders typically consider both credit profiles. A lower score on one side can affect your interest rate or how much you qualify for, even if the other partner’s credit is strong. Talking openly about your credit can help you understand what to expect during the application process.

Ways to help a partner build credit

Opening a joint account adds that payment history to both credit reports. You can also add your partner as an authorized user, but account activity affects both of your credit scores, making responsible use important. If your partner doesn’t qualify for a traditional card yet, a secured credit card can be a good place to start.

Check out credit-building resources from Navy Federal Credit Union

You don’t have to build credit on your own. Navy Federal offers tools and resources that can help you get started and stay on track. The cashRewards Secured credit card gives you a practical starting point, while the Mission: Credit Confidence® Dashboard lets you track your VantageScore® and see how your habits can affect it.

If you have a Navy Federal checking account, the recurring payment reporting tool powered by Bloom+^{Footnote [2]} can also help by adding bill payments you already make, like eligible^{Footnote [3]} rent and utilities, to your credit history.

Building credit takes time, but progress adds up with consistent habits.