How to Build Credit Without Going Into Debt

You can build credit without going into debt by using credit in small amounts and paying it off in full and on time, while keeping your credit usage low and avoiding too many new applications at once.

Make It Simple With KOHO Essential

With KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

1) Pay Everything On Time (This Matters Most)

Your payment history is a huge part of your credit profile. The easiest win is simple: never miss a due date.

Easy trick: set automatic payments for at least the minimum payment.

2) Keep Your Credit Usage Low

Try to use less than 30% of your available credit limit. Lower is usually better.

Example: if your limit is $1,000, try to keep your balance under $300.

3) Pay Your Balance in Full (So You Do Not Carry Debt)

You can build credit even if you only spend a little.

The key is to pay it off fully each month so you do not rack up interest and debt.

4) Start With Safer Credit Options

If you are new to credit (or rebuilding), these can help:

• Secured credit card: you put down a deposit and use that as your limit.

• Credit builder loan: you make small payments, and the money is held for you like savings until the end.

These are designed to help you build credit without needing a big credit limit.

5) Consider Being an Authorized User (With the Right Person)

If someone adds you as an authorized user, that account’s history may show up on your credit report and help you, especially if they always pay on time.

Only do this with someone who is very responsible, because late payments can hurt you too.

6) Apply Less Often

A bunch of applications in a short time can make you look risky. Apply only when you actually need the product.

Also, in Canada you generally need to be the age of majority (18 or 19 depending on your province) to apply for a credit card.