Office of Financial Empowerment
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Build or Reestablish Your Credit

Even though you can pay in cash for practically everything, you still need to have some credit (the ability to borrow money today to be repaid at a later date).  Lenders, employers, landlords and many others may review your credit report to judge your trustworthiness.

New immigrants and high school students usually have no credit because they have yet to establish it.  Other people may have bad credit histories (i.e., due
       to bankruptcy).  With no or bad credit history, it can
       be hard to get a loan at a good rate when you
       really need it.  

Three Ways to Build or Reestablish Your Credit

  • Apply for a secured credit card.   
    A secured credit card is a card that can be used as cash.  It requires you to deposit money into an account to secure the credit limit offered, meaning if you fail to pay the bill, the lender can take the money from your account.  Remember to avoid fees by always making payments in full and on time. 
  • Get a cosigner.  
    Ask a relative or friend who has good credit to cosign a loan.  A cosigner shares responsibility for the loan with you, and both of your credit histories will be impacted.  Remember to keep in mind that your cosigner is responsible to pay the debt if you fail to pay.
  • Apply for gas cards or a department store credit card.
    Gas cards and department store credit cards are relatively easy to get because they usually offer low credit limits.  After shopping around for the best rates, apply for a gas or department store credit card and use it to establish credit.  Remember to pay your bill in full every month to show that you can pay your bills responsibly.