Building credit from scratch? 5 things you should know

Can't get a credit card without credit history, but can't build credit history without a card — sound familiar? Don't be discouraged. There's a way around the "chicken or egg" credit problem.

1. The hardest part about building credit from scratch is getting a credit card in the first place. It means a credit card company needs to believe in your ability to pay. If the first company you contact says no, don’t give up. Find a credit card company that thinks outside the box and sees you as more than just a credit score.

2. It doesn’t take forever for your credit score to improve. Everyone's credit experience will be different, but credit card customers can notice an improvement in their credit score soon after they start using their card.

3. Your credit score may change (hopefully for the better) every month. If you observe good credit practices, you're likely to see your credit score improve incrementally from month to month. A free credit monitoring app (for example, Credit Karma) makes it easy to keep an eye on your score as you build your credit.

4. The most important rule: always pay on time. Speaking of good credit practices, this is the big one. Always paying on time is essential for building good credit. Set up automatic payments for your card, so you’ll never be late.

5. Start building your credit as soon as possible. The sooner you start, the sooner you'll have an excellent credit score with all the benefits it brings. Do some research to find a credit card company that believes in your ability to pay. Even if you at first you only qualify for a card with a $500 dollar limit, it will be worth it. Start where you can and you'll qualify for a better card or higher credit limit that much sooner.

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