Preheat oven to 350°F and line a baking sheet with parchment paper.
Combine shredded cheddar, flour, and cold butter in a food processor. Pulse 8-10 times on high, or until the mixture resembles coarse crumbs with butter evenly distributed.
Run the processor on low and drizzle 2 tablespoon water through the feed tube. Stop once the dough forms a ball, around 10-15 seconds. Add extra tablespoon water if needed.
Pour dough onto a floured surface and gently knead 2-3 times, or until smooth. Roll dough out into a thin sheet (⅛ inch thick), turning the dough while rolling to maintain an even thickness.
Use a cookie cutter (or knife) to cut dough into desired cracker shapes. Transfer the shaped crackers to the baking sheet, spacing them ½ inch apart.
Bake for 10 to 15 minutes, or until the edges are lightly golden and crackers feel crisp when tapped. Cool on baking sheet for 5 minutes, then transfer to wired baking rack.
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Notes
Dust your counters with all-purpose flour: This stops the stickiness and makes the dough easier to handle. Use all-purpose flour, since it won’t absorb into the dough itself.
Don’t rush the cooling time: The crackers will become crispier as they cool on the sheet. Let them cool down before you move them to the rack!
Add any extra seasoning before pulsing: To get a close match to the shop-bought kind, throw in a pinch of celery salt.