Maybe you never plan to swipe a credit card a single time in your life. You might assume that you don’t have to worry about your credit score, but the impact of your creditworthiness goes far deeper than your ability to attain a large credit card limit. In a sense, your credit score is an indicator of your trustworthiness that is used broadly within our society. As your trust score increases, lenders simultaneously grow more confident that their assets are safe with you. This matters because the lower the perceived risk of lending their assets to you, the less you pay to borrow them. Tangibly, this means that with a low credit score (or no credit history at all), the cost of a car or home can be substantially more expensive than it would be with a good score. Furthermore, credit score is taken into account when determining the cost of rent and apartment deposits, insurance premiums, or whether or not you will be allowed to rent a car or stay at a hotel.
So how can I build my credit?
First, let’s break the myth: you don’t need to carry debt to build credit. You just need to demonstrate that you can borrow responsibly and pay it back consistently. That’s it. And thankfully, there are a few low-risk ways to do this—even if you’re starting from scratch.
Open a credit account you can manage.
To show lenders that you are a trustworthy borrower, you have to borrow money and pay it back. This is why, even if you have not abused credit cards, having no credit history can be costly. While it is not as bad as having a history of not paying back the money that you borrow, the lack of data means that lenders are taking a greater risk than they would be on someone with a clear history of repayment. The most obvious solution is to open a credit card and start building your credit history, but the risk here is going into debt. In a moment, I will offer some solid options that can help you build your credit while minimizing the risk of debt, but if you choose to open a credit card, use it for a few small, regular purchases (gas, phone bill, internet, Netflix, etc.) and pay it off in full each month. This builds positive payment history without running up a balance.
Chime Credit Builder: A Debit Card That Builds Credit
Chime’s credit builder program is one of the lowest-risk ways to get started. Instead of borrowing money, you’re loading funds onto a card—think of it like a prepaid debit card. The amount you load becomes your credit limit, and your payments are reported to all three credit bureaus. There’s no credit check, no interest, and no risk of going over your limit because you can’t spend more than what you’ve already loaded.
Pros:
- No credit check
- No interest or late fees
- Impossible to overspend
- Helps establish a positive payment history
Cons:
- Doesn’t report credit utilization (which limits how much your score can grow)
- No path to transition into a traditional credit card
This is a great tool for total beginners or anyone rebuilding credit with caution.
Secured Credit Cards: Training Wheels with an Edge
Secured cards look and act like normal credit cards, but they require a deposit up front (usually $300 – $1,000) that acts as collateral. That deposit becomes your credit limit. If you stop paying, the lender can keep the deposit, which makes this lower risk than a traditional unsecured card.
Why they work:
Secured cards report both payment history and utilization. Keeping your balance under 30% of your limit—and ideally under 10%—can help your score grow more quickly. Many cards offer a graduation path to an unsecured card after a year or so of on-time payments.
Risk:
You can still go into debt if you carry a balance or miss payments. But with a low limit and a bit of discipline, this is a relatively safe way to build credit faster than debit-based options alone.
Credit Builder Loans: Save First, Spend Later
This option flips the idea of a traditional loan on its head. Instead of receiving the money up front, you make fixed monthly payments to a bank or credit union, and once the loan term ends (usually 6 to 24 months), you receive the full amount. Think of it as a savings plan that builds your credit as you go.
Why it works:
These loans report to the credit bureaus and help you build a credit mix (a factor in your score that rewards having more than one type of account). They’re especially useful if you’re trying to build an emergency fund at the same time.
Caveats:
- You need to prove income to qualify
- You won’t have access to the money until the loan is fully paid off
- Doesn’t report utilization
This is best for folks who are just starting out or rebuilding, and who want a safer, more structured way to build both savings and credit.
Final Thought
The bottom line: You don’t need to take on risky debt to build credit. There are smart, intentional ways to grow your score while protecting your future. Whether it’s a secured card, a debit-based program like Chime, or a credit builder loan, the key is consistency—show that you can borrow and repay responsibly, and your credit will grow over time.
Did You Know?
Your employer sponsors this financial wellness benefit from Francis. The benefit connects you with down-to-earth financial planners who educate and advise on any money matters…without the sales pitch. We are exclusively engaged by employers like yours and have no investment products to sell, so you can feel confident that you will always receive objective advice.
Your financial planner will help you set priorities and achieve your money goals, without judgment or financial jargon. Know that all discussions are kept strictly confidential. This service is offered as an employee benefit with no per-session co-pays, so you can meet with a financial planner as often as you wish. Services are paid by your retirement plan or your employer.
Connecting with a financial planner is easy! Here’s how:
- Visit FrancisWay.com > Services > Participant Portal
- Call (866) 232-6457
Download the free mobile app (Search for Francis LLC)
