The best way to build credit when you don’t need to borrow money

You’ve done the hard part. You’ve built up savings, organized your credit union or bank accounts and created some financial stability. 

But there’s one piece missing: your credit history. 

If you’ve never used credit before, it can feel like a catch-22: You need credit history to qualify for credit cards or loans — but you need credit cards or loans to start building credit history in the first place. 

But if you’ve already been investing in your financial health, you’re in a good position to build credit from scratch. You don’t need to take on risky debt or drain your savings. You just need to use the right tools consistently. 

What it actually means to start building credit 

When people talk about building credit, they’re really talking about creating a track record with the credit bureaus Experian, Equifax and TransUnion. These bureaus collect information through credit reporting and that information is used to calculate your credit score. 

At a high level, credit scores reflect how reliably you handle borrowed money. The biggest factor is your payment history — specifically, whether you’re paying bills on time. Other factors include how much money you owe, how long your accounts have been open, how much of your credit limit you use and the types of accounts you have. 

You can pull your credit report for free once a year at AnnualCreditReport.com. If you’ve never used credit, you may see a very thin file — or no file at all. That’s normal. Checking your report regularly helps you track progress and catch errors early as you start building — it can even help you detect fraud. 

Right now, you don’t need to worry about every detail. The goal is simple: create steady, positive payment activity over time. 

The best way to build credit is with a credit card 

For most people, the best way to build credit is with a credit card. 

Why? Because credit cards offer frequent credit reporting, making it easier to build a positive track record quickly. Every on-time payment helps strengthen your profile.  

But you have to qualify first. The best way to start is where you already are. If you have a relationship with a financial institution, check out their credit card offers first. You may have more flexible options based on your existing accounts and history, and at a credit union like Empeople, you also have trusted financial guidance experts who can help you make the right choice. 

If you don’t qualify for a traditional card yet, a secured credit card can help you start building credit history. These cards require a deposit, but they function like regular credit cards and report your activity to the credit bureaus. 

Use your card the right way from day one 

To build good credit and improve your credit score, you need consistent, positive activity. 

1. Automate purchases and payments 

Think of your credit card as a tool for building credit, not for borrowing money. You don’t even need to put the card in your wallet. 

Set up your card for one or two predictable, automatic expenses each month, like a streaming subscription or utility bill. Then focus on making on-time payments, every time. 

Setting up autopay can help ensure you never miss a due date. 

2. Keep your balance low 

How much of your available credit you use — often called credit utilization — impacts credit scores. A good rule of thumb is to use less than 30% of your credit limit, and lower is even better. 

Keeping your balance low shows lenders that you can manage credit responsibly without relying on it. 

3. Always pay in full if you can 

You don’t need to carry a balance to build credit. 

In fact, paying your balance in full each month helps you avoid interest while still building a strong payment history. 

That’s what makes credit cards such a powerful tool when used correctly.  

Other ways to build credit 

A credit card is often the easiest place to start, but it’s not the only option. 

Become an authorized user 

If a family member or trusted person with strong credit is willing, you can become an authorized user on their credit card. 

This allows their account’s credit history to appear on your credit report, helping you start without opening your own account right away. 

However, this works both ways. If the primary cardholder misses payments or carries high balances, it can negatively affect your credit. Only become an authorized user on an account with a long history of on-time payments and low balances. 

Use a loan strategically 

Some people choose to take out an auto loan or personal loan to help build credit. Empeople offers both options. 

This approach can work, but it should be tied to a real need — like purchasing a vehicle — not just building credit. 

If you go this route, focus on manageable payments and consistent on-time activity.  

Talk with a financial advisor 

There are other loan options out there for people starting out. With credit builder loans, money is set aside in a savings account while you make fixed monthly payments. Once the loan is paid off, you receive the funds. 

A financial guidance expert who is helping you build your financial strategy may be able to direct you the right kind of builder or starter loan. 

You’re starting from a strong place 

If you’ve already built savings and financial stability, you’re ahead of the curve. 

Learning how to build credit from scratch is less about changing your habits and more about adding one new layer to what you’re already doing well. 

Start small, stay consistent, and give it time. With the right approach, you can find the best way to build credit and boost your credit score without taking on unnecessary risk, opening the door to more financial opportunities down the road.