8 Tips on Building Credit for Beginners

Written By: Tiara Lynn

Growing up, building credit was the last thing on my mind. I avoided anything to do with loans and credit cards. It wasn’t until I took an “Introduction to Business” course that I learned about all the good and the bad when it came to credit. As someone with no credit history at all, I didn’t know where I should start. With all the knowledge I had gained from my own research and the course, I am here to share with you some tips that helped me build my credit score.

Photo Credit: Tiara Lynn

1.Take Out A Small Loan

My first step when it came to building credit was taking out a small loan. I was only working for nine months when I first applied for a small loan of $500, and so I needed a co-signer. I was lucky enough to have my grandma’s help with that. If you are working for over one year then chances are you won’t need a co-signer. Taking out a small loan helps you establish credit. 

2.Always Pay On Time

My first loan came with a lot of stress when it came to making the payment. I was always confused as to when I should pay and what not. You need to know that payment history plays a big role on your overall credit score. If you are late once, it may affect your credit score and can stay on your credit score for up to seven years. What I like to do is find out exactly when it’s due and pay my bill a couple of days before the due date. If possible, set up automatic online payments because it’s really convenient.

3. Paid Off The Small Loan…Now What?

It took about five months for me to finally pay off the loan. Even if I could’ve paid it off sooner, it’s never a good idea. Your goal is to build credit and paying it early won’t improve your credit. Keep the loan open for the length agreed and watch your score improve. What happens after you pay off your small loan? For me, I decided to apply for a credit card because it’s not borrowed money. I planned on using it to pay bills and then pay the credit card. Sadly, I needed to continue to build my credit. The bank offered me an secured credit card. 

A secured credit card is where you deposit the amount of the credit card limit as kind of like a security deposit. I decided to just do $500 limit. I kept this secured credit card for about 7 months before applying for an unsecured $500 credit card. Once I applied for an unsecured credit card, I got approved for a $1,000 credit limit. I know, it doesn’t seem like a lot but these are really great for someone who isn’t looking to go into debt. If you want to build your credit to prepare for the future of buying a house or something. Keep your accounts in good standing. 

4. Don’t Go Purchase Happy When Applying For New Accounts

Don’t apply for new credit cards or loans all at the same time. I get that you may be trying to see different options, but doing this can make your credit score decrease. Normally, each time you apply for a new loan or credit card it’s considered hard inquiries. What you want to do is be mindful when picking places you want to apply at. I normally look at the interest fee and annual fee when it comes to credit cards.

5. Monitor Your Credit

I recommend Credit Karma because it is what I use, but it’s not necessary accurate. My credit score on Credit Karma is significantly lower than what the banks pull. However, it has been really helpful when it comes to keeping track of payment history and credit card utilizations.

6. Keep Credit Card Accounts Open

Even if you don’t use your credit card often, it’s always good to keep it active. The longer the age and payment history, the more chances you have on improving your overall credit score. 

7. Keep Credit Utilization Low

A lot of people had suggested to keep credit utilization below 30% and that’s what I’ve been doing. If you have multiple credit cards, I believe it’s 30% across all cards. I’ve been doing just that and my score continues to improve daily. However, sometimes ‘life happens’ and we may find ourselves with quite a bit of credit card debt. If you’re trying to find a way out from a whole lot of credit card debt, this is how you can do it!

8. Don’t Take On More Than You Can Manage

I know a lot of people have multiple credit cards because they believe that they can manage but it can get overwhelming. If you overuse and are unable to make a payment, it will affect your credit score. That’s why I will always suggest to be mindful when committing to new loans and credit cards.

Photo: Tiara Lynn, owner of

These are just some tips that have worked for me. Within 10 months, I went from NO CREDIT to GOOD CREDIT. All within that time frame, I was able to get my own car and an unsecured credit card. I have learned that credit can be good and bad, but it all depends on the way you manage it. Please be advised that I am not a professional. Although these tips worked for me, I can’t guarantee the same results.

Tiara is a twenty-seven year old from the Island of Guam. She is a blogger sharing all things inspired by personal experiences, interest, growth, and development on her website


  • Serial Entrepreneur, Healthcare professional, and Democratic Socialist at heart. Believes in the power of community, grass roots movements and awareness of socioeconomic changes as a means of bringing about positive change in the world.

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