How To Build Credit: Proven Strategies That Work

As you probably know, your credit score plays a big role in your financial life. A strong score can make it easier — and cheaper — to get loans, credit cards, or even rent an apartment. 

If you’ve been dealing with overwhelming debt and missing payments or paying late as a result, you might have seen your credit score suffer. And if you’re thinking about filing bankruptcy, you might be worried about what will happen to your credit score as a result.

👉 The good news is that no matter where you're starting from, there are steps you can take to build your credit!

Here are our top six tips for increasing your credit score:

• Use credit cards wisely

• Prioritize on-time payments

• Keep your balances low

• Make loans work for you

• Report payments like rent or cellphone bills that don’t usually count

• Celebrate the wins and stay consistent

Let’s dive deeper into each of these.

Use Your Credit Accounts Wisely

Credit accounts can help you build your credit when you use them in ways that show you’re responsible. 

There are a few types of credit accounts to consider. If you have a credit history and a decent credit score, you may qualify for a regular credit card. Also called an unsecured credit card since it’s not backed by any collateral.

If you don’t have a credit history or you’re rebuilding from a low credit score, you may want to try a secured card instead. It’s usually easier to get approved for secured cards because you basically fund the card yourself. 

All this said, you do not have to get a credit card to build credit! Many Upsolve users are hesitant about credit cards. If you’ve had a bad experience with credit cards in the past and you want to avoid them for now, consider a secured card or see if you can become an authorized user on someone else’s card to get the credit benefits you’re seeking.

You can learn more about each of these options below.

Get a Regular Credit Card and Use It Responsibly

📣 Your payment history is the single most important factor in your credit score. 

In order to make a payment, you need to spend money. The good news is that even if you’re living on a modest budget, you still need to buy groceries, a bus ticket or gas for your car, and other essentials. If you can put some of those items on a credit card and pay the balance off each month, you can steadily build up your credit score.

🔑 The key is:

• Use your card regularly.

• Keep your balance low (ideally below 30% of your credit limit).

• Pay off the card on time each month. And, if possible, pay it in full so you can avoid interest charges and extra fees.

This shows future lenders that you can reliably borrow money and pay it back. 

If you’re rebuilding after bankruptcy you might be shocked to see how many credit card offers you get after filing your case. But if you find that you can’t qualify for a regular credit card or you don’t like the terms (as in, the interest rate is sky high), consider a secured card or becoming an authorized user on someone else’s account instead.

Start With a Secured Credit Card

💳If you don’t qualify for a regular credit card yet, a secured card can be a great first step. These cards require a refundable deposit, usually a few hundred dollars. This deposit sets your credit limit. 

Then you can use the card like any other credit card, and your payment history will be reported to the credit bureaus. Over time, this can help you qualify for an unsecured card.

Lots of banks and online lenders offer secured credit cards. But many Upsolve users choose Self’s secured credit card. It has the lowest minimum deposit with no check credit required. You can get a Self card for as little as $100.

⚠️ Post-bankruptcy, a secured credit card can be a great stepping stone to learning how to use credit wisely. As with all credit products, the same rules apply though: Keep your balance low and pay it off regularly and on time.

Become an Authorized User on Someone Else’s Card

👥 If someone close to you — like a parent, partner, or trusted friend — has good credit and a long history with a credit card, they might be able to add you as an authorized user. You don’t even have to use the card to benefit!

As long as the card issuer reports authorized user activity to the credit bureaus, their positive payment history can show up on your credit report too. It’s a low-risk way to start building credit without applying for your own account right away.

If you have a thin credit profile, this can be a great strategy to get some credit history. But it also works well for people rebuilding after bankruptcy, both for the credit-building benefits and the peace of mind.

⚠️ If you plan to use the card, make sure you and the account holder are on the same page about how it will be used and paid. Clear communication can help protect both your credit and your relationship.

Make On-Time Payments Every Time

One of the most important things you can do to build credit is to pay your bills on time, every time. If this article already sounds like a broken record it’s just because that’s how important this tip is!

📈 Since your payment history makes up the biggest portion of your credit score, even one late payment can lower your score and stay on your credit report for years. If you’ve been dealing with crippling debt, you probably already know this well! Many Upsolve users do their best to juggling multiple debt payments, but financial stress is real and it’s common to miss or be late on payments before you decide to file bankruptcy and get a fresh start.

Why do on-time payments matter so much? Lenders want to see that they can count on you to pay what you owe by the due date. Staying consistent with your payments builds trust with lenders. This is why it’s one of the most effective ways to improve your credit over time.

📌 Tip: Set up automatic payments or calendar reminders to avoid missing a payment by accident. And remember, it’s best to pay the amount in full, but if you aren’t able to, it’s still better to make the minimum payment on time than to skip it altogether.

Keep Your Balances Low

The second biggest factor used to calculate your credit score is your credit utilization ratio. 

💡Credit utilization ratio just means how much of your available credit you're using. And keeping it low can have a big impact on your score.

Most experts suggest using less than 30% of your total credit limit at any time. If you want to give your score an extra boost, aim for 10% or less.

For example, if your credit limit is $1,000, try to keep your balance between $100–$300 to stay in the 10%–30% range. Doing so, shows lenders that you're not relying too heavily on credit to get by.

Plus, keeping your balances low also makes it easier to pay off what you owe without building up interest.

📌 Tip: Make multiple payments throughout the month or pay off charges right after they post. That way, even if you use your card regularly, it doesn’t look maxed out when the lender reports your balance to the credit bureaus.

Get a Loan That Makes Sense for You

Loans can help you build or rebuild credit by showing that you can handle borrowed money responsibly. 

📈 Just like with credit card payments, when you make loan payments on time each month, that activity gets reported to the credit bureaus and helps strengthen your credit history. 

But credit cards are revolving lines of credit and loans are installment credit.

💡With installment credit you repay a fixed amount each month (plus interest) until the loan is paid off. With revolving credit you can borrow, repay, and borrow again up to your credit limit.

Importantly, not all loans are the same, and some are safer or more affordable than others.

Here are some common loan types that people use to build credit and who they work best for:

✅ Credit-builder loans are small, low-risk loans designed for people with no credit history or damaged credit who want to show consistent on-time payments. ✅ Personal loans are unsecured loans that can help build credit but work best for people with steady income who already need to borrow for a specific purpose.

✅ Student loans are long-term loans for education that may help younger borrowers build credit if they make consistent payments after graduation.

✅ Auto loans are secured loans that can help build credit for people who need a car and can reliably afford the monthly payments.

Here’s more info on each type of loan.

Credit-Builder Loans

Credit-builder loans are designed to help people improve their credit. They’re usually for smaller amounts like a few hundred dollars.

💡 Here’s how they work: You make monthly payments to the lender. The lender reports those payments to the credit bureaus and holds the funds in a locked savings account. Once you’ve made all the payments, you get the money back, usually minus some interest that the lender keeps to pay for the service.

🏦 Credit-builder loans are usually offered by community banks, credit unions, or online lenders. Since there’s little risk for the lender, interest rates are often lower than other loan types. 

Many Upsolve users get a Self credit-builder loan after their bankruptcy discharge, so they can start rebuilding your credit and savings.

Personal Loans

When you get a personal loan, the lender gives you a lump sum of money upfront that you repay in monthly installments. 

These are usually unsecured loans, which means there’s no collateral involved. Because of that, interest rates can be higher. This is especially if you don’t have strong credit yet.

Some people use personal loans to consolidate debt or cover unexpected expenses. Like any loan, a personal loan can help you build credit if you make your payments on time. 

But this is usually a more expensive path to rebuilding your credit, so it’s usually not a good idea to borrow money just to try to raise your score.

Student Loans

If you have or are considering getting student loans, they can help you finance your education and build credit after you graduate.

⚖️ Not all student loans are created equal: Federal student loans tend to have lower interest rates and more flexible repayment options than private loans. Private loans are often more expensive and the lenders are usually less forgiving if your finances change.

Student loan payments are usually reported to the credit bureaus automatically.

💪 If you’re already in repayment, making consistent, on-time payments is a great way to strengthen your credit. But taking on student loan debt just to boost your score is rarely worth it — especially given how long these loans can last and how high some balances are.

Auto Loans

🚗 If you need a car and can afford the monthly payments, financing a vehicle could also help you build credit over time.

Auto loans are installment loans. This means you get approved and take out a certain amount of money to buy a car. Then, you repay the money in monthly payments over time (usually 3–6 years) with interest. Payments are usually automatically reported to the credit bureaus. 

📌 Tip: Be sure you know your all-in loan and auto cost (including car insurance!). If you don’t have a great credit score, you can usually still get approved for a car loan, but the interest rate is likely to be high. 

Shop around for the best rate and avoid borrowing more than you can comfortably pay each month.

Self-Report Payments to the Credit Bureaus

The current credit system is biased toward people who are taking on debt like credit cards or loans. But many people without credit cards and loans reliably make monthly payments for things like rent, utilities, and a phone bill. 

👉 Luckily, you can now sign up for services to make those payments count toward your credit.

There are several services online, many Upsolve users sign up for Self’s rent reporting tool because it’s free, doesn’t require your landlord to participate, and it reports your monthly payments to all three of the major credit bureaus — Equifax, Experian, and TransUnion. You can also try services like Experian Boost, Rental Kharma, or RentReporters.

🪄 This isn’t a magic fix, but it can help you to get positive information added your credit file without taking on new debt.

Celebrate the Wins and Stay Consistent

There’s no one-size-fits-all approach to building credit. Some strategies work better than others depending on your situation, so it’s okay to start small and choose the ones that feel manageable. 

💡 Even just one or two well-used credit tools can make a big difference over time. The most important part is making consistent, on-time payments every month. 

🎉 Be sure to celebrate your wins along the way! And while it’s great to use a free credit monitoring tool to see how you’re doing, try not to get obsessed about small fluctuations, and definitely do not tie your self-worth to your score. At the end of the day, it’s just a number and you’re so much more than that.

Also, it’s ok to ask for help. If sticking to a budget or managing your spending feels tough, consider talking to a nonprofit credit counselor. Upsolve can connect you with an NFCC-accredited counselor for a free consultation. They can help you create a plan that fits your goals.

Bonus Tip: Check Your Credit Reports Regularly and Report Errors!

Most people know their credit score but they’ve never run or looked at their actual credit report. If that’s true for you, no worries, but let’s change that ASAP.

It’s free and pretty easy to get your credit reports… and yes, you’ll have more than one!  That’s because each of the three major credit bureaus — Equifax, Experian, and TransUnion — keeps its own report. 

💻 You can get one free report from each bureau every week at AnnualCreditReport.com. It’s a great way to spot any mistakes or signs of identity theft early.

If you find something that looks wrong, you can file a dispute directly with the credit bureau that reported it. Fixing errors can help your credit score and protect your financial health in the long run.

🔎 Here’s what to look for:

• A late payment you actually made on time

• Accounts you don’t recognize (could be a sign of identity theft)

• Outdated personal information (like an old address or employer)

• Duplicate accounts listed more than once

• Incorrect account balances or credit limits

• Closed accounts that are marked as open

• Incorrect account status (for example, an account marked as delinquent when it’s current)

• Hard inquiries you didn’t authorize

Frequently Asked Questions About Building Credit

Building credit looks a little different for everyone. Here are quick answers to some of the most frequently asked questions Upsolve users have about credit.

How Long Does It Take To Build Good Credit?

Building a solid credit score usually takes at least six months of on-time payments and responsible credit use. But improving a low score or building a great score can take longer, depending on your situation.

Can I Build Credit Without a Credit Card?

Yes! You can build credit through tools like credit-builder loans or rent-reporting tools. You can also become an authorized user on someone else’s credit card that has good credit but opt not to use the actual card.

Will Checking My Credit Score Hurt It?

No. Checking your own credit score is called a soft inquiry, and it won’t affect your credit. Only hard inquiries can cause a small dip. Hard inquiries typically happen when you apply for a loan or credit card.

📌 Tip: If you’re shopping around for a car loan or mortgage and getting prequalified, try to have all lenders check your credit within the same two-week window. This is called rate shopping, and credit scoring models will usually treat multiple inquiries during this period as just one, which can minimize the impact on your score.

What’s a Good Credit Score To Aim For?

A FICO score of 670 or higher is generally considered “good.” But even getting your score into the 600s can make it easier to qualify for better rates and credit offers.

Should I Open New Accounts To Build Credit Faster?

Not necessarily. In fact, opening too many accounts too quickly can actually lower your score and make it harder to keep up with payments. Many people find it’s better to start with just one or two and focus on making on-time payments. 

That said, if you don’t have many different kinds of credit accounts, you could consider opening one new account to diversify your credit mix. So if you have a credit card, you could take out a small personal loan since that’s a different type of credit. This is a minor part of your credit score, but it can help.

What if I Can’t Pay a Bill On Time?

If you think you’ll miss a payment, contact the lender as soon as possible. Some may offer a short grace period or help you adjust your payment plan. Avoiding late payments helps protect your credit.

Can I Remove a Late Payment From My Credit Report?

It’s not easy, but some people have success with writing a goodwill letter to the lender asking for a one-time late payment to be removed. This can be especially effective if you’ve had a strong payment history overall.