The Smart Student's 12-Month Credit-Building Plan

5 MIN. READ

 

Key takeaways: 

 

• College students should prioritize building credit. The best way to get started is with a student credit card.
• You can build a solid history of making payments on time and improve your credit score in only 12 months.
• It’s important to learn to manage credit responsibly and adopt good habits right away. 

How long does it take to build credit? 

If you’re starting from scratch, it typically takes three to six months of responsible credit use to generate a credit score. To build a good credit history that gives you better approval odds and interest rates, expect it to take 12 to 24 months of consistent, on-time payments.

For college students and even high school students, a lack of credit history often gets in the way of important milestones like getting a first car loan or renting your own place.

It doesn’t have to be that way. Our simple one-year guide to building credit is here to help, and you’ll have 12 months’ worth of on-time payments before you know it. Are you up for our credit-building challenge? 
 

Why Does Building Credit Matter? 

Before going into how to build credit, we should talk about why you need a credit report that’s not empty. 

Your report shows the kind of credit accounts you have, how long you’ve had them, how much debt you have, and whether you make payments on time. These factors determine your credit score, ranging from 300 to 850. Lenders, landlords, and even some employers will look at this score to determine if you’re responsible with money. 

The problem is that you’ve never used a credit line before, which means you don’t have a score yet, and lenders can’t decide. It matters because your credit score controls your access to lots of things. You can get your parents to co-sign in some cases, but you’ll run into limitations until you have a credit history of your own. 

For instance, credit gives you access to: 
 

• Financing your first car. 
• Borrowing for student loans. 
• Passing a credit check to rent a home. 
• Signing up for a phone contract where you pay for your device over time. 
• Setting up utilities without a deposit. 
• Negotiating a good car insurance rate. 

How to Build Your Credit in 12 Months 

How long does it take to build credit? Not as long as you might think. These simple tips will help you go from not having a credit history to adopting good credit habits in only 12 months. 
 

Months 1-2: Apply for Your First Credit Card 

Your first step to building credit is to get a credit card. As a first-time credit card user, there are two options to consider: 
 

• A student credit card designed for young adults with no credit. This usually means a low spending limit. 
• A secured card requires you to pay a security deposit upfront and get it back after using the card responsibly for a while.

Once you have a credit card, use it for small purchases and set up automated payments to avoid letting your balance build up. Ideally, you should keep your utilization rate under 30%, or not use more than 30% of the credit limit available. 

If you’re wondering how to build credit without a credit card, you should know that options are limited. You can build credit with a loan if you can find a lender willing to let you borrow money without having a credit history, or become an authorized user on someone else’s card. 

There is another strategy you could use called Experian Boost. You can sign up for this service for free, and Experian will add things like on-time phone and utility payments toward your credit history. It’s important to understand though that this service has some limitations, most significantly is that it will only impact your Experian credit report and scores. It does not affect your scores with the other two major credit bureaus and lenders may pull reports from any of the three bureaus. 
 

Months 3-4: Establish Good Credit Habits 

Keep building your credit history with responsible habits: 
 

• Your credit utilization rate shouldn’t exceed 30%. Managing your credit will be easier if you keep it under 10 to 15%. 
• Make small purchases and pay them off immediately or at the end of the week to keep your card active. 
• Automate payments from your checking account to never miss a credit card payment. A single late payment can stay on your report for as long as seven years! 

Months 5-6: Take a Closer Look at Your Credit 

It’s time to see your hard work pay off. Each of the three credit bureaus (Equifax, Experian, and TransUnion) will give you a free copy of your credit report once a year. There may be slight differences in the information each credit bureau has on you, but your credit scores should be close. 

Head to AnnualCreditReport.com and follow the steps to request your report. Go over it carefully and reach out to the credit bureau if you see any mistakes. 
 

Months 7-8: Boost Your Credit Score 

With six months of credit card payments behind you, you should contact your credit card issuer and ask for a credit line increase. The higher your credit line, the easier it is to keep your utilization rate low.

If you haven’t done so already, look into getting added as an authorized user on a parent's credit card. Even if you don’t use their credit line, this simple step will increase your available credit. 
 

Months 9-10: Diversify Your Credit Mix 

Now that you’ve mastered managing your credit card, it’s time to look into building a more diverse credit mix. Your credit mix refers to the types of credit lines you have and showing you can responsibly manage more than one product is good for your credit score. 

You could consider getting a second credit card for emergencies or, if you're pursuing higher education, applying for student loans. Remember, only take out loans if you genuinely need them. Avoid taking on debt solely to build credit.
 

Months 11-12: Planning for Your Next Step 

As the year comes to an end, you should think about what comes next for your finances. Now that you have close to a full year of payments on your credit history, you can leverage your existing credit to achieve your next financial goal. 

This next step could be saving up for a down payment on a car, building an emergency fund or planning for your higher education expenses. 
 

Build Your Credit With PFCU 

It’s never too early to start working on your credit, and building your credit history should be your first priority. Applying for the right credit card can help. 

At PFCU, we offer student credit cards with perks like no hidden fees, low APRs, and no credit requirements to qualify. Find out more about these student credit cards before taking on our credit-building challenge! 
 

FAQs About Building Credit

How long does it take to build credit?

If you’re starting from scratch, you will start seeing your score go up after only six months of using a credit card, but it will take a few years to have a solid credit report.
 

How to build credit at 18?

As a young adult, you can build credit with a student credit card or by becoming an authorized user on a parent’s credit card.
 

What is a student credit card?

A student credit card is a credit line designed for young adults with a limited credit history. Your credit limit will be limited, but you’ll get perks like rewards, low fees, and low qualification requirements.