Building credit is crucial for accessing loans, credit cards, mortgages, and more throughout your financial life. If you’re starting from scratch with no credit history, the right card can help you establish credit and set you up for financial success down the road.
Secured vs. Unsecured Credit Cards for Building Credit

When trying to build credit, you’ll typically have two options – secured or unsecured credit cards. Here’s how they compare:
Secured Credit Cards
Secured cards require an upfront security deposit, usually at least $200, which acts as collateral on the account. The deposit amount also usually determines your credit limit. The deposit is fully refundable when you close the card, provided you’ve made your payments on time.
Secured cards are easier to qualify for since the issuer has your deposit to cover any unpaid debts. This makes them ideal for building credit from nothing. Just be prepared to put money down upfront.
Pros
- Easier to qualify for with little or no credit history
- Opportunity to graduate to an unsecured card
- Can help establish good payment history
Cons
- Require security deposit upfront
- Tend to have higher APRs
Unsecured Credit Cards
Unsecured cards don’t require a security deposit to open the account. This gives you more flexibility since you don’t have to tie up funds as collateral. However, unsecured cards typically have stricter eligibility requirements.
If you do qualify for an unsecured card with no credit history, be prepared for high APRs, low credit limits, and not many extra perks. But it’s an option if you want to avoid a deposit.
Pros
- No security deposit required
- More flexibility with spending limit
Cons
- Harder to qualify for with no credit history
- Often have high APRs and fees
- Low credit limits
When building from scratch, a secured card is often the easiest place to start. But everyone’s financial situation is different. Consider both options as you map out your credit-building strategy.
READ ALSO: How to Get Approved for a Credit Card with Bad Credit in 2024
Tips for Choosing a Credit Card to Build Credit
If you’re starting with no credit history, choose your first card wisely. Here are five tips for finding the right fit:
1. Check for No Credit History Requirements
Look for cards that are open to applicants with limited or no credit history. Student credit cards and secured cards are good options here, as they tend to have more relaxed requirements.
Avoid cards that require a minimum credit score, as that will automatically disqualify applicants new to credit.
2. Compare Costs Upfront
While building credit, you want to minimize unnecessary costs. Compare factors like:
- Annual fees
- Balance transfer fees
- Cash advance fees
- Foreign transaction fees
Ideally, look for a $0 annual fee card when possible. But also consider reward potential, credit limits, and other perks that offset costs.
3. Review the APR
Since anyone building credit is at higher-risk to lenders, credit building cards often have higher APRs. Compare APRs among your top contender cards. The lower, the better.
Also note penalty APRs, which kick in if you miss payments. These can exceed 30%, so you want to avoid triggering them at all costs.
4. Check Credit Bureau Reporting
To build credit, your card needs to report your payment activity to the three major credit bureaus (Experian, Equifax, and TransUnion). Avoid cards that don’t specify this or only report to one bureau.
Ask issuers about their reporting policies if uncertain. Verifying this upfront ensures your efforts actively impact your credit reports and scores.
5. Look for Credit Limit Increase Opportunities
Your initial credit limit will likely be low until you establish a positive history. But look for cards that review your account periodically for credit line increases.
Higher limits allow you to maintain lower credit utilization, an important factor for building strong credit.
By weighing these key factors, you can find the best card for kickstarting your financial journey.
Expert Advice on Building Credit from Scratch
We asked credit card experts to share their top tips for going from no credit to good credit. Here is their essential advice:
“Be strategic with your first card. Consider all the costs, credit limits, and barriers to entry. A secured card with easy approval odds but also clear rewards potential and credit-building features is ideal for beginners.” – Max Myers, Credit Card Analyst at The Ascent
“Don’t apply for too much credit at once. Adding many new accounts can lower the average age of your credit and cause a short-term drop. Apply for just one or two cards in the beginning.” – Brittney Mayer, Credit Strategist
“No matter what, make payments on time every month – this one habit matters so much! Set calendar reminders, automate payments, or sign up for due date alerts from your issuer.” – Holly Johnson, Award-Winning Credit Card Expert
“Keep credit utilization low, under 30 percent. Higher ratios signal risk to potential lenders, even if you pay balances off every month.” – Erica Sandberg, Consumer Finance Expert
In short, be smart when applying for your first card, develop good habits right away, and regularly monitor changes to your credit reports and scores. Small efforts make a big difference over time.
To Recap
Building credit doesn’t happen overnight, but with the right credit card strategy and smart financial habits, you can establish good credit scores within your first year. Be patient and diligent with payments, keep credit utilization low, and your hard work will pay dividends for years to come.
Compare your best options for starter credit cards, weigh the costs and benefits, and monitor your score regularly in the early months. Small steps make a big difference – you’ve got this!
Frequently Asked Questions
How long does it take to build credit from nothing?
It can take approximately six months to start seeing a FICO score after getting your first credit card. But building to a “good” score of 670 typically takes at least a year. Be patient, focus on positive behaviors, and check your progress periodically.
Can I build credit without a credit card?
Yes – loans, mortgages, student loans, and even cell phone bills can all contribute to credit scores when reported to bureaus. But getting a starter credit card is simplest for complete beginners since you aren’t borrowing large lump sums.
Is a high credit limit good for building credit?
Yes, higher credit limits allow you to keep credit utilization low as you spend on the card. Experts recommend keeping utilization below 30%. A higher limit makes this easier to accomplish as you build credit history.
Should missed payments hurt your credit right away?
Unfortunately yes – payment history is the biggest factor influencing credit scores. Just one 30-day late payment can drop a good score by over 100 points and remain on your report for seven years.
How many credit cards should you get to build credit?
To start, one or two credit cards are ideal. Adding too many new accounts at once can lower the average age of your credit history and negatively impact your score. Get experience with just one or two cards first.
In another related article, How to Build CPN with 700 Credit Score in 2023