15 Best Ways to Build Credit in 2026 (Even With Bad Credit)

Ever wonder why lenders care so much about your credit score?
Think of it as your financial report card; it tells them how you’ve handled debt in the past. That’s why it’s usually the very first thing they check when you apply for a mortgage.

Now, here’s the good news: a low score doesn’t mean your dream of owning a home is out of reach, far from it. With the right steps, you can boost your credit and put yourself back on track.

In fact, improving your credit is a key part of our program, designed to guide you toward becoming a homeowner.

In this article, we’ll share 15 practical ways to build credit and bring you one step closer to getting the keys to your new home.

1. Secured Credit Card

A secured credit card works like training wheels for credit. You put down a refundable cash deposit, for example, $200 to $500, and that deposit becomes your credit limit. Because the bank has your deposit, approval is much easier than with regular cards. Most secured cards report to all three major credit bureaus, which is exactly what you need to start (or rebuild) your history.

Use it for small, predictable purchases (gas, groceries), keep your balance well under 30% of the limit (under 10% is even better), and pay on time every month. After 6–12 months of good habits, many issuers will upgrade you and return your deposit. Popular options include the Discover it® Secured and Capital One Platinum Secured.

2. Credit-Builder Loan

Think of this as a “save first, get the money later” loan. The lender parks your loan amount (often $300–$1,000) in a locked account. You make fixed monthly payments, and when you finish, the money is released to you. Every on-time payment is reported to the bureaus.

It builds payment history without handing you a lump sum you might be tempted to spend.

Treat it like a savings plan; set up autopay, finish the term, and you’ll walk away with both a stronger file and a small amount of cash. Providers include Self Financial and many local credit unions.

3. Authorized User

This is a simple way to borrow someone’s positive history called credit card piggybacking. A trusted person (parent, partner, close friend) adds you to their existing credit card. You don’t even need to use the card; their on-time payments and low balances can flow to your report.
Confirm the issuer reports authorized-user data to the bureaus (most major banks do). Also, make sure the primary cardholder keeps utilization low and never pays late, because their habits now affect you, too.

However, piggybacking is not the best option to build credit. If you want to know why, refer to this article: 10 Reasons Why Credit Card Piggybacking Is Not Helpful for Your Mortgage Approval

4. Co-Signer for a Loan or Card

A co-signer with good credit applies with you and promises to repay if you don’t. That extra reassurance can help you qualify or get a better rate.
To do it right, only borrow what you can comfortably repay, use autopay, and keep your co-signer in the loop. Late payments hurt both of you. When your credit improves, look into refinancing or requesting a co-signer release if the lender allows it.

5. Rent & Utility Reporting

You already pay rent, power, and internet; why not get credit for it? Rent-reporting services and tools like Experian Boost can add these payments to your file.
Before you enroll, check which bureaus they report to (some report to one or two, not all three) and what the fees are. Keep paying exactly on time; that steady streak is what helps your score.

6. Store Credit Card

Retail cards from places like Target, Macy’s, or Best Buy are often easier to get. They report to the bureaus and can help you establish history.
These cards usually have high interest rates and limited use outside the store. Make one small purchase occasionally, pay it in full, and avoid “deferred interest” promotions.

7. Student Credit Card

This credit card is designed for college students with little or no history. They often have no annual fee and straightforward rewards.
They’re great starters to build credit because of easier approval rules and a chance to build a long, clean track record from a young age. If you’re under 21, be prepared to show income or have a co-signer. Examples include Discover it® Student Cash Back and Capital One SavorOne Student.

8. Prequalification for Credit Cards

Prequalification is a quick soft check that won’t affect your score. The bank tells you if you’re likely to be approved for a credit card before you submit a full application (which would trigger a hard inquiry).
It is important because fewer hard pulls mean less harm to your score while you’re shopping around. If the prequal looks good, apply, use the card responsibly, and those on-time payments will start building your history. Most big issuers like Capital One, Discover, and American Express offer prequal tools on their sites.

9. Subprime Credit Cards

These are cards aimed at people with damaged or limited credit. They’re easier to get but often come with low limits, high APRs, and lots of fees (activation, monthly maintenance, annual fees). Some don’t report to all three bureaus, which limits their usefulness.
They can help if you can’t qualify for a secured card. A reputable subprime card that reports to all bureaus can be a stepping stone, but read the fee schedule closely. Examples include OpenSky® Secured Visa® (no credit check, reports to all three) or Credit One Bank® cards (unsecured, but watch the fees). Remember to keep balances tiny and pay on time.

10. Dispute Credit Report Errors

Wrong late payments, accounts that aren’t yours, balances that don’t belong; these are all errors that happen, and can drag your score down.
Pull your reports from AnnualCreditReport.com, circle the mistakes, and dispute them with each bureau (Experian, Equifax, TransUnion). Include evidence like statements or payoff letters.
Most disputes are reviewed within about a month. Check back to confirm the correction went through.

This could easily be a confusing and tough process if you don’t have enough experience. That’s where the Mortgage Ready Program can assist you. To learn how credit repair fits into qualifying for a mortgage, check out our Credit Repair for Homebuyers page.

11. Deal with Collections Accounts

Collections are heavy hitters against your score. If you have one, you’ve got options: pay in full, settle for less, or negotiate a “pay-for-delete” (not all agencies agree, but it’s worth asking).
The smart approach is to get every agreement in writing before you pay. If you have already paid, you can request a goodwill deletion; some creditors will remove the mark as a courtesy based on your current good standing.

12. Keep Credit Utilization Low

Utilization is the share of your available credit you’re using. Under 30% is the common guideline; under 10% is ideal.
Here is a tactic that works to build credit. Make an extra payment before the statement closes to lower the reported balance, spread spending across cards, and set alerts so balances don’t creep up. Even if you pay in full, a high balance on the statement date can still hurt your score; timing matters.

Keeping your balances low is one of the most effective ways of improving your credit for a mortgage, because lenders closely evaluate how much of your available credit you’re using.

13. Ask for a Credit Limit Increase

A higher limit with the same spending lowers your utilization, which is good news for your credit score.
Many issuers let you ask online; some do a soft pull, others a hard pull, so check first. Your odds are best after six months of on-time payments or if your income has increased.
Note: Don’t request an increase if it might tempt you to spend more. The goal is more headroom, not more debt.

14. Hybrid Debit/Credit Cards

These aren’t traditional credit cards. They link to your bank account, pay your purchases, then pull the money back from your account (often the next day). The provider reports your on-time activity to the bureaus, helping you build credit without carrying a balance.
It is a good fit for people who want to avoid revolving debt but still build history. Check fees and confirm they report to all three bureaus. Examples include Extra Card, Zoro Card, and Cred.ai.

15. Secured Installment Loan

This is a regular loan backed by collateral, like a car title or savings account. You get the money up front and repay in fixed monthly amounts. Payments are reported to the bureaus, which helps your score.
This option to build credit is best for someone who actually needs to borrow and also wants to build credit. Understand the risk: if you default, the lender can take the collateral.

Credit-Building Options Summary

#	Option	Credit Check Type	Ease of Approval	Cost / Risk Level	Reports to Bureaus	Credit Building Potential
1	Secured Credit Card	Hard pull	✅ Easy	Low (deposit required)	✅ Yes	✅ Strong
2	Credit-Builder Loan	Varies	✅ Easy	Low (small monthly cost)	✅ Yes	✅ Strong
3	Authorized User	No check	✅ Easy	Very Low	✅ Usually	✅ Strong (if account is good)
4	Co-Signer Loan or Credit Card	Hard pull	⚠️ Medium	Medium–High risk	✅ Yes	✅ Strong
5	Rent & Utility Reporting	No check	✅ Very Easy	Low or Free	✅ Optional (via service)	✅ Moderate
6	Store Credit Card	Hard pull	✅ Easy	Medium (high interest)	✅ Yes	✅ Good
7	Student Credit Card	Hard pull	✅ Easy (if student)	Low–Medium	✅ Yes	✅ Strong
8	Prequalification Card	Soft pull	✅ Very Easy	Low (to check)	✅ If you apply	✅ Good (once approved)
9	Subprime Credit Card	Hard pull	✅ Easy	⚠️ High (fees & interest)	⚠️ Not always all 3	✅ Good (if used responsibly)
10	Dispute Credit Report Errors	No check	✅ Very Easy	Free	✅ Indirectly	✅ Strong (if error is fixed)
11	Deal with Collections Accounts	No check	⚠️ Medium	May require payment	✅ Yes (updated status)	✅ Strong (once resolved)
12	Maintain Low Utilization Rate	No check	✅ Easy	None	✅ Yes	✅ Very Strong
13	Request a Credit Limit Increase	Soft or Hard pull	⚠️ Medium	None (if approved)	✅ Yes	✅ Strong (lowers utilization)
14	Hybrid Debit/Credit Card	No check	✅ Easy	Low–Medium (monthly fee)	✅ Yes (varies by provider)	✅ Good
15	Secured Installment Loans	Hard pull	⚠️ Medium	Low–Medium (uses collateral)	✅ Yes	✅ Strong (if payments on time)

 

Conclusion

To wrap up, you need to know that building credit is not impossible if your credit score is bad right now, but it’s not a piece of cake either. You can start learning good credit habits, like paying your bills on time or maintaining your utilization rate low. However, when it comes to disputing credit report errors or dealing with collection accounts, you need to be careful. Experience and expertise are necessary to build credit. Always make sure to seek assistance from a professional team to help you with your credit repair issues.

The Mortgage Ready Program is here for this purpose. Sign up today and let’s work together to build your credit!