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3 Ways to Establish Credit

Establishing credit is becoming even more important in today’s culture. It is not only beneficial when qualifying for a credit card, vehicle loan, or home loan. Good credit impacts your insurance rates and many employers conduct credit checks before hiring an employee.

A high credit score and a positive credit history show lenders (and employers) that you are financially responsible. It shows that you are trustworthy to borrow money and repay it. Those who have recently graduated high school or college and those who have always paid cash should intentionally create a plan to establish credit.

Using a credit card is not the only option when it comes to building good credit.


If you have been at your job and residence for one year and have no negative reports with the credit bureaus, you may be eligible for a savings account loan. Here is an example of how it works.

Apply for a one- or two-year $500 loan. If approved, the $500 loan proceeds are deposited in a savings account that you own. A hold is placed on the funds, securing the loan until it is paid in full. You make the monthly payments on time, pay off the loan, establish credit, and the $500 (plus interest) in your savings account is now available for withdrawal.

A co-borrower is another way to obtain financing and establish credit. In this situation, you apply for a loan with someone who already has established and good credit. As your co-borrower, they assume equal responsibility for the loan – vouching for your credibility and accepting the risk along with the bank.


Credit cards are another option but require extreme self-discipline. Interest rates are much higher for those without credit. If you choose this route, it is imperative to pay the balance in full each month and on time to avoid high-interest and fees. Consider setting a budget on how much you will charge each month.


  • Pay bills on time.
  • Don't open too many credit accounts at once.
  • Check your credit reports annually. Get started at

A Friendship State Bank loan officer would love to get to know you, discuss your situation and options as well as answer any questions. You can contact a loan officer near you at 812-667-5101.