You’ve just graduated from college, but you don’t have a credit history. How do you build credit — and a good credit score — from scratch?

Unfortunately, you can’t avoid using credit, says Gail Cunningham, vice president for the National Foundation for Credit Counseling in Silver Spring, Md. “You’ll need it to buy a house or car. It’s hard to manage debt responsibly, but you have to because we live in a credit-dominated society,” she says.

Here’s how to enter the “real world” of credit:

  • Open a bank account. Even though opening checking and savings accounts aren’t usually reported to the credit bureaus, Cunningham says lenders often ask on credit applications whether you have those account types. If you do, it can count in your favor.
  • Apply for multiple types of credit. To get a home or car loan, you’ll need a “thick file,” meaning lenders want you to have at least three credit lines. Otherwise, there’s not enough of a credit score for them to evaluate you as a credit risk.
    “It’s easiest for young people to start building credit with a retail store card or gas card,” says John Ulzheimer, president of consumer education for They have higher interest rates than a Visa or MasterCard, but the credit limit is low so you won’t have much exposure to overspending. “A Gap card with a $500 limit is an easier way to build credit than getting a car loan,” he says.
  • Don’t apply for too much credit at once. While it takes several months for activity to be reported on your credit report, only get credit as you need it. “If you apply for it all today, it can signal to lenders that you’re desperate for credit,” says Cunningham. And too many credit inquiries can have a negative impact on your credit score.
  • Consider a co-signer. If you’re declined for credit, have someone back you up as a co-signer like one of your parents. The primary borrower is expected to make the payments, but the pay history is reported in both names. That’s why both parties must be committed to acting responsibly, says Cunningham. “All activity, both good and bad, is reported on both people’s credit reports, and missteps can lower credit scores,” she says.
  • Get a secured credit card. This card requires a cash collateral deposit that becomes the credit line for that account. If you put $500 in the account, you get a secured credit card with a $500 limit. These cards also have higher interest rates and sometimes fees, Ulzheimer says. “But after you establish a good payment history, the issuer may let you add more collateral to your credit line or even offer an unsecured card,” he says.
  • Take out a small loan. A personal loan from a bank or credit union can establish credit if you repay it faithfully, says Cunningham. “You can get a co-signer for a personal loan, say for $500. You may be asked to put up collateral, but you can use your car, jewelry, even your coin collection, to back up the loan,” she says.
  • Get a copy of your credit report. An essential tool for ensuring you’re on track with your debt-management skills is your credit report. You can receive a free credit report annually from each of the three credit bureaus — Equifax, Experian and TransUnion — at”You can have a great credit score with just a couple of credit accounts as long as you keep your debt low and manage it properly,” says Ulzheimer.