Beginners Guide: How to Build a Credit File

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One of the guiding principles of award travel is protecting and maintaining your credit score. Getting approved for top rewards-earning credit cards like the Chase Sapphire Preferred® Card requires a clean credit file and a minimum 700+ credit score. But what if your credit score is under the magic 700 point threshold? Or you’re fresh out of college and trying to build your credit file from scratch?

To establish a good credit history, you need to borrow money from a lender and pay it back on time and in full. But without a credit history, banks will be reluctant to approve you for credit. It's a classic ‘chicken vs. egg' scenario. Thankfully, the path to building a credit file is well worn. Start small, use your credit wisely, pay-on-time every-time, and your credit score will rise as a result.

Maintain an excellent credit score

Understand How Your Credit Score Is Calculated and Reported

When you borrow money from a credit provider, the lender reports your payment history to one or more credit reporting agencies.

These agencies compile the information provided, using it to determine your FICO score. Your FICO score is a three digit number between 300 and 850, with 850 being the highest achievable credit score. The following factors are taken into account when calculating your credit score. Note: your income is not on your credit report and plays no part in your credit score calculation, which is why creditors will ask for your income on a credit card application.

  • 35% Payment History – late payments represent a much higher credit risk for lenders
  • 30% Amounts Owed – also referred to as credit utilization rates or available credit vs. how much is in use
  • 15% Length of Credit History — average age of revolving debt accounts
  • 10% New Credit – hard pulls and new accounts show here
  • 10% Credit Mix – entire lending portfolio, i.e., car loans, mortgages, guarantor accounts, credit cards, etc

You’ll find a full breakdown of each point in our tips on managing your credit score, but one of the big takeaways is how factors like payment history and credit utilization rates play into the equation. As you build a history of positive (or negative) information on your credit file, that data is recorded, and other lenders can then look at that information to help decide whether to offer you credit.

Banks and other lenders want to see a history of you borrowing money via a range of finance vehicles (auto loans, credit cards, mortgage, store charge accounts, etc.), using it responsibly, and paying it back on-time, in-full, over an extended period.

How to Monitor Your Credit File

We recommend checking your credit file on a regular basis. That way, if anything is amiss, you can jump on it immediately without any adverse effects to your score. You can signup to a paid service like, but there are also options that don't require you to shell out a monthly fee.

Rewards cards like the Barclaycard Arrival Plus® World Elite Mastercard® allow you to monitor your FICO score as a credit card benefit, or you can use an online service such as Credit Scorecard from Discover or Credit Karma to ensure records are updating on-time and correctly.

How Access to Credit Can Increase Your Credit Score

Contrary to popular belief, applying for credit cards and adding new lines of credit can have a positive long-term effect on your credit score. The best strategy if starting from scratch will be secured credit cards, small personal or auto-loans, student or ‘entry-level’ credit cards, and having yourself added as an authorized user on a family member’s credit card accounts.

Entry-level cards don’t offer the same level of rewards, benefits, or credit limits as their premium counterparts, but they are designed to help people at the beginning of their credit journey establish a credit history, and help develop a relationship with lenders that will have benefits in the future.

Secured Credit Cards

A secured credit card is an option even when you have no credit file or bad credit. You deposit cash into an account, and you’re provided a credit card to use as you would a typical credit card (the limit is typically the same amount as the ‘security deposit' with the bank).

You’ll pay interest on purchases and late-fees if you don’t pay on time, but you’ll also reap the benefits if you use the card responsibly, as all data is passed on to credit agencies and treated as a typical credit card. Below you'll find two rewards earning secured credit cards from US Bank, along with a card each from Digital Federal Credit Union, Capital One, and Discover.

These cards all offer a quick and easy method for getting some initial feedback on your credit score, and if held for six months to a year, will help you achieve the kind of score needed to move into higher tiered cards.

Student, Entry-Level, and Store Credit Cards

In addition to secured credit cards, most banks and credit card providers offer base, entry-level credit cards that allow you to earn a small number of points, miles, or cash back while you build your credit score. These include student-focused credit cards, store cards offered in partnership with big retailers like Costco, and cash back cards like those in the list below from Citi, Chase, and Discover.

Store cards and student-focused cards have historically been much easier to get than travel rewards cards. And while the rewards aren’t as generous as the cards you’ll be applying for in the future; they offer a foot in the door to the world of points, miles, and free luxury travel.

It’s also worth mentioning that you want to keep any credit cards you receive early in your credit report that doesn't carry an annual fee, as they contribute to the overall age of your credit accounts. Closing credit cards you've held for a long time can put a dent in your credit score by lowering the average age of revolving credit accounts and lowering the total credit available to you across all credit accounts, which can raise your credit utilization ratio. If you have cards with no annual fee, it costs nothing to hang onto them.

Final Thoughts

Building your credit file takes time. From the first card application, you could be looking at 1-2 years to get your score up into the mid to high 700’s, gaining access to premium rewards cards, big signup bonuses, and awesome travel benefits in the process. Award travel is a slow burn, not a race. Take your time, diversify your credit, pay all your bills on time, and slowly build out a portfolio of rewards-earning credit cards to help you reach your travel goals.

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  • How does the addition/deletion of authorized users affect your credit profile? I can definitely see the benefits of helping my kids build a decent credit profile right away by adding them as AUs on one or more of my cards, but what happens when they don’t need it anymore and I delete their AU profile on my credit?

    • The answer isn’t entirely clear. If you remove them from an old account with a long history, that can hurt their score. I’d recommend keeping them permanently on an old account (or at least until their own credit is well established). You don’t need to give them the card itself or let them put charges on it to get the credit benefit.

      • Ok, so there’s a potential negative affect for the AU of deleting them from a profile. But is there an impact on your personal credit profile of adding and deleting AU’s? A quick Google search says no, with a few articles saying yes; so inconclusive?

        • The credit bureaus consider their exact credit score formula a “trade secret.” I’m not aware of a definitive answer. That said, I wouldn’t expect a big impact—especially if the person you’re adding has limited or no credit history. If you add someone with a bankruptcy or negative/delinquent payment history, that could potentially be a different story.

          In any case, I think it’s a relatively safe bet that negative consequences could be reversed by removing the AU.

  • Great comprehensive summary of CC for beginners. Wish I had this info years ago

  • I appreciate this post! I remember how hard it was when I first started with credit. I was an autho user on my moms credit card but still couldn’t get my own card right before moving out and into a different state. A company took pity on me and gave me my first card, sadly I do not still have my old Capitol One card. But I have have moved on to bigger and better things, since I have been smart with my credit.

    I would like my sons, who are too young to get anything now, to not have the same issues. Do you have a recommended age when I should dip their toes? I don’t think I really want to wait until they are in college. I would like them to start off still at home a few years, so I can help them understand ins and outs of payments, how your credit score is managed, etc.

    Gee, this is a horribly stupid question but it might make you smile. Do they have to be 18 if I add them to my card, etc? Or does a student card let them under 18, if I cosign?

    • You can add someone under 18 to a credit card. Most requirements are 16, some allow 15. Student cards require card applicants to be 18 as you cannot enter a binding agreement unless you’re 18 in most cases.

  • Just opening a mortgage dropped my credit by 50 points!

  • Thanks for the guide! I wish I had this when I was first starting out.

  • I find I have come to believe in this old adage, “Let your credit work for you.” Thx for a helpful article.

  • This is a good resource for a friend. Forwarding it now.

  • Generally helpful to be added as an authorized user, as long as the primary account holder keeps their account in good standing

  • Just had this talk with a couple of young relatives. I’ll be sharing this blog post now. TY!

  • Thanks for the awesome information for a newbie like me!! This will point me in the right direction 🙂

  • Also helps to monitor your credit report for free at the Annual Credit Report site.

    • Keep in mind is not a credit monitoring service. It is a government mandated service and provided by the three major credit reporting agencies to allow consumers to pull their credit report once per year from each agency. If you want to monitor you’ll need to use a site like CreditKarma.

  • Great starting info. Beginners might want to consider asking a cosigner to guarantee repayment.

  • CreditKarma makes it redundant, but CreditSesame is another TU monitoring option, and at least for a time at least, one could sign up directly with Experian for a free account where one’s proxy score could be viewed. Also, I believe pretty much any AmEx or Barclays card offers a FICO score, not just the two listed. Citi and Chase also offer free FICO scores to most cardholders, as well.

  • Great read indeed! I had no clue about Secured Credit Cards existence.

  • Very useful overview.

    As always, this hobby only works for those who pay off their credit cards IN FULL every month.

  • Handy info for someone in their 20’s!

  • Bertrand Say says:

    Good to know.

  • Don’t worry if you see your credit score lower after taking out a new card, it bounces back after a month or so.

  • awesome post on gaining and keeping those precious credit scores!

  • I would like to know and understand the characteristics of a person that has an 850 FICO versus an average person that has a 700 FICO score. Does anyone know how to get it beyond the average? IE: An increase in assets, payments on time, a combination of all the above? ? ?

    • The key to a 850 (or near 850 credit score) are:

      1) Always pay bills on time
      2) Keep your utilization on any / all of your card under 30%
      3) Have a diverse set of financial products (mortgage, auto loan, student loan, retail/store credit cards, etc)
      4) Have these card products for a long time

      That said, once you’re above 760 it is all excess/gravy. I can’t point to a single example where someone that had an 800 credit score was approved for something or received a better interest rate than someone that had a 760 score on the same scoring model.

  • Long time credit user. Have a high credit score based on always paying on time and not missing any payment

  • Good advice!

  • When I was 18 I started building credit by putting $1,000 in a Bank CD and then using that CD as collateral for a 12 month loan that I slowly paid back. It was well worth it.

  • Thanks for the great post! Wish there were better perks for no annual fee cards.

  • Discover It is a card that’s fairly easy for people without huge credit histories to obtain, and it comes with free FICO scores. It’s a good cashback card anyway, especially since Discover doubles all of the cash you earn in the first year! I earned over $1,000 back in year one with the card thanks to category maxing, Discover Deals shopping portal, and the doubling of the cashback. And you aren’t limited in how much cash you can redeem at a time, unlike other cards.

  • This is helpful. I work with students who have no credit history and are afraid of credit cards. I appreciate the recommendations of cards to start with.

  • Great tips! Thanks.

  • Very informative article.

  • If I have a card I barely use and I’m retaining it for credit history, should I ask for a credit limit reduction? I believe the limit is about $11K and I don’t put more than $10 on it when I do use it.

    I’m concerned that having a larger credit limit might hurt my chances of being approved for any potential cards I might want with that bank in the future.

    • You should not. Now, this isn’t a one-size-fits-all answer, but in the event that a bank has already extended you as much credit as they would like, you could request that they reallocate the credit you have on this card to your new card and they would very likely take that into consideration. I’ve personally done this many times with several issuers and know many others that do the same thing.

  • Thank you. I am recommending this article to some of my “beginner” friends.

  • It does take time, but you’ll be pleasantly surprised eventually. And really, it will probably be sooner than you think. Let’s not forget that ultimately, banks WANT you to do business with them. So if you show those steps/progress, the “offers” will come.

  • angelo fonseca says:

    It is very important to maintain a good payment history. Having a good score with the agencies that monitor risk and credit can yield good benefits.

  • If you haven’t already, maybe you should have a guide to how to protect ones credit in order to continue using rewards, such as credit freezes and temporary thaws.

  • Super useful overview for beginners!

  • keep old accounts open – even if you barely/never use them to increase average length

  • great information for young people starting out in this game

  • Very informative post, I certainly learnt a couple of things

  • When I started playing the points and miles game, my score actually increased. I usually in the low 800s now, unless I’ve just opened an account, but it bounces back quickly.

  • This is part of what has screwed me over, not having enough history. I got into this hobby fairly young but my score has improved drastically since I did. For the young ones out there, be patient and it’ll get better.

  • This is a great read for anyone who uses credit cards.