Guide
How to build credit from scratch
If you have never had a credit card or loan, lenders have no history to judge you by. That is the starting point, not a dead end. This guide covers what goes into a credit score and the simple habits that build one.
What makes up a credit score
Scoring models weigh several factors. The FICO model, which many lenders use, breaks them down roughly like this:
| Factor | Approximate weight | What helps |
|---|---|---|
| Payment history | 35% | Paying every bill on or before the due date |
| Amounts owed | 30% | Using a small share of your available limit |
| Length of history | 15% | Keeping older accounts open |
| Credit mix | 10% | Having more than one type of credit over time |
| New credit | 10% | Not opening many accounts at once |
Two of these, paying on time and keeping balances low, make up about two thirds of the picture. Those are the two you control most directly.
Step by step
- Check your credit reports. You can get free reports from the three major bureaus at AnnualCreditReport.com. If you have never borrowed, the reports may be empty, and that is normal. Look for accounts you do not recognize, which can signal identity theft.
- Open a starter account. Cards designed for people with limited or fair credit history, including secured cards that take a refundable deposit, exist to help you begin a record. Compare the annual fee, interest rate and whether the issuer reports to all three bureaus.
- Use it lightly. Put one small, regular bill on the card, such as a phone plan or a streaming service.
- Pay on time, every time. Set up automatic payments for at least the minimum, and pay the full statement balance when you can. Late payments can stay on your report for years.
- Keep your balance low. Many people aim to use under 30% of their limit, and lower is generally better. On a $500 limit, that is about $150.
- Be patient. Many scoring models need an account to be open for around six months before they can produce a score. Growth after that is gradual.
Common mistakes to avoid
- Applying for several cards at once. Each application can cause a hard inquiry, which can lower your score slightly for a while.
- Carrying a balance to "build credit." You do not need to pay interest to build a score. Paying the statement balance in full works just as well and costs less.
- Closing your oldest card. It can shorten your average account age and reduce your available credit.
- Maxing out the card. High usage can lower your score even if you pay on time.
A note on approval. Every issuer decides on its own whether to approve an application, based on your credit history, income and other factors. No site can promise approval. Reading the card's terms first helps you apply for something that fits your situation.
Ready to look at your options?
Review the cards on Capital One's site, check the fees and rates, and apply when it fits your plan.
Start your applicationThis guide is general information, not financial advice. Rules, scoring models and card terms can change.