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How to Establish Credit

Lay the foundation for good credit

There are a lot of benefits to having good credit. Lenders aren’t the only ones who look at your credit and credit history — employers, insurance companies, landlords, cell phone providers, and more can reference your credit history when they make decisions about you. That’s why having good credit may help you with everything from getting a job to getting a new cell phone service.

Why is credit important?

Building credit is a journey that takes time, so it’s best to start sooner rather than later.

Why credit is important (video)

To build a credit history, you first must know which activities impact your credit score and report. A credit report documents your credit activity, and keeps a record of your credit accounts and how responsibly you have paid them over time.

Help build a good financial foundation

Even activities that don’t directly impact your credit report can still demonstrate your financial responsibility and help you qualify for new credit. Lenders look at all of your financial decisions, along with your credit history, to make decisions.

  • Paying utility, cell phone, or other bills that are in your name
  • Opening a checking account and using your debit card
  • Building a savings account

Even though these activities don’t establish credit and usually don’t appear on a credit report, overdrafts or accounts in collections may appear and can negatively impact your credit score.

Activities that establish credit

  • Acquire a gas or retailer card; these can be easier to qualify for than a bank card
  • Acquire a secured or unsecured credit card in your name. Examples of cards include: Visa®, MasterCard®, American Express®, or Discover®
  • Get a loan (such as a student loan or an auto loan) in your name, with or without a cosigner or co-applicant
  • Become an authorized user on a trusted person’s account (Wells Fargo reports this to the credit bureaus, but not all lenders do, so check with the card issuer)

How do I get credit?

Learn the single-most important thing you can do to make sure you build your credit wisely.

How to get credit (video)

Here are some key steps to help you start building your credit: 

Become an authorized user

You might benefit from someone else’s good credit by becoming an authorized user on a trusted person’s credit card. Keep in mind that not all lenders report authorized user accounts to the credit bureaus, so make sure to find out if your credit card company does.

Consider a cosigner or co-applicant

Applying with a cosigner or co-applicant may help you qualify or acquire better credit terms, but remember that your cosigner or co-applicant also takes responsibility for payment. That means the credit history will be reflected on both of your credit reports.

Apply for a college credit card

If you’re a student, look for credit cards for college students. They may have easier qualification requirements, and may help you build credit while you’re in school.

Get a secured card

With a secured card, you can start building a solid credit history. Simply deposit an amount into a collateral account and your credit limit will usually equal that amount. Keep in mind that the money in your collateral account won’t be available until you’ve repaid the balance in full. Wells Fargo offers secured cards starting at $300.  

Apply for a secured loan

With a secured loan, you use your savings account as collateral. A secured loan can help you continue building your savings and take care of your immediate expenses. Keep in mind that the money in your collateral account won’t be available until you’ve repaid the loan in full.

Consider gas and retailer credit cards

Gas and retailer credit cards may also help establish credit, and they might be easier to acquire than bank-issued credit cards. Be aware that they may have different terms than other cards, so make sure to review them carefully and make your payments on time.


Having a checking or savings account helps the bank know you and how you manage your accounts. This can be helpful when applying for your first credit account.

How to build good credit

Building credit is a journey that takes time, so it’s best to start sooner rather than later.

How to build good credit (video)

The top things that affect your credit score:

Payment history

The most important thing is that you pay all of your bills on time. Any missed or late payments have a negative impact on your credit score. Keep in mind that this may apply to many of your bills, not just loans and credit cards.

How much you owe

Using your entire credit limit may have a negative impact on your credit score. It’s better to keep balances low.

Credit history

How long you’ve been using credit also matters. The longer, the better. So if you are new to credit or rebuilding credit, start building a good credit history now.

Types of credit

Your credit scores improve if you have different types of credit, such as auto loans, credit cards, student loans, and so on.

Debt-to-income ratio (DTI)

Your debt-to-income ratio (DTI) is the percentage of how much you make each month that you have to pay on recurring payments, like a credit card. If it gets too high, it can negatively affect your credit score.


Building good credit depends on your ability to pay back what you borrow. Start small with what you can comfortably pay each month along with your other obligations.


Cosigner or co-applicant

A cosigner is someone who lends their credit to help the primary borrower qualify for a loan and is responsible for repayment if the primary borrower fails to make payments. A co-applicant applies jointly with the primary borrower and shares responsibility for the repayment of the loan.