How to Build Credit – Establish Credit – Wells Fargo

Building credit and maintaining a good credit history are key steps towards building your financial future. At first, credit may seem frustrating — you can’t get credit because you’ve never had credit. But there are actions you can take to start establishing a strong credit history.

woman grocery Why you should establish credit

Why you should establish credit

If you’ve always paid with cash or checks to make purchases and haven’t used credit, it’s a good idea to start. And if you’ve had credit problems in the past, it’s important to re-establish your credit history for a few key reasons:

  • You may need good credit for such routine matters, such as having utilities connected to your home.

  • Good credit is important to secure financing when buying furniture, a computer, a car, or even a new home.

  • Employers may check the credit rating of prospective employees.

  • Renting an apartment may be easier, as a good credit rating tells landlords that you are a person who’s more likely to pay the rent on time each month.

  • If you need a loan, banks may look more favorably upon you if you have a good credit history.

How a credit card can help

A credit card may be a good way to start building credit. You can use your credit card to make purchases, and they are very convenient. One way to start a credit history is to have one or two department store or gas station cards. They allow you to:

  • Buy online or over the phone where cash may not be an option

  • Make travel reservations, purchase airline tickets, and rent cars. Car rental companies may require a hold or deposit if you do not use a credit card.

  • Shop more safely by not carrying a lot of cash

  • Budget larger purchases by paying in installments

  • Access funds for emergency needs

Ways to manage your credit history

Once you start using credit, it’s essential to manage it properly. So use your credit card to make purchases, but don’t go over your credit limit or let your balance owed get too high to manage. Pay at least the minimum payment due each month, or more if you can, and make sure you pay on time. The best way to reduce the interest owed on a credit card is to pay off the balance as quickly as possible. Otherwise, it may take many years to pay off even a small credit card balance if you only make minimum payments. If you follow these tips, you may build a strong credit history that will help you meet your financial goals.

Empower yourself with financial knowledge

We’re committed to helping you achieve financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.

My Financial Guide

Products to Consider

  • Checking Accounts

  • Credit Cards

  • Wells Fargo Online®

You must be the primary account holder of an eligible Wells Fargo consumer account with a FICO® Score available and enrolled in Wells Fargo Online®. Eligible Wells Fargo consumer accounts include deposit, loan, and credit accounts, but other consumer accounts may also be eligible. Contact Wells Fargo for details. Availability may be affected by your mobile carrier’s coverage area. Your mobile carrier’s message and data rates may apply.

Please note that the score provided under this service is for educational purposes and may not be the score used by Wells Fargo to make credit decisions. Wells Fargo looks at many factors to determine your credit options; therefore, a specific FICO® Score or Wells Fargo credit rating does not guarantee a specific loan rate, approval of a loan, or an upgrade on a credit card.

When you apply for credit, your lender may calculate your debt-to-income (DTI) ratio based on verified income and debt amounts, and the result may differ from the one shown here.