Not having credit is a pain. To some, it may even feel like it has as many setbacks as having bad credit. If you don’t have an established credit history you probably won’t be able to get approved for loans, credit cards, or an apartment. Since creditors use your credit history to determine your trustworthiness and risk level, failure to have any established puts you in a real pickle. If you’ve found yourself in this situation, there are things you can do to start building a credit history today.
Become a User on Someone Else’s Credit Card
If you’re unable to get approved for a credit card on your own, the first option would be to ask someone you know if they wouldn’t mind adding you to their account. You could be an authorized user of someone else’s credit card and establish credit that way. You’d obviously want to be responsible and not go overboard, however, the combined activity on the credit card account could help you establish some credit of your own.
Get a Secured Credit Card
When building your credit score from scratch, one financial product you may want to apply for is a secured credit card. They are much easier to get approved for because creditors require you to put down a cash deposit to receive the card. The amount you deposit is typically your credit limit. You can use the card just as you would a regular credit card, and some companies even increase the limit with good financial habits. Creditors have a lower risk, however, because should you fail to pay the balance back in a timely fashion, they have your deposit to use as collateral.
Quick tip: Don’t have the cash to deposit onto your secured credit card? Here’s where you should consider using quick installment loans to your advantage. You can apply for a small loan with no credit check and use these funds to fund your secured credit card. Though you’ll need to repay the installment loan, you can do so in increments as they offer convenient repayment options.
Ask Someone to Co-Sign
If you need to get a car loan or some other type of loan that requires an extensive credit history, you may need to ask someone you know for help. Asking someone with a good credit score to cosign on a loan with you also lowers your risk level to creditors. The co-signer is not only vouching for you as a borrower, but they’re saying that should you neglect to make the payments that they will be financially responsible. Therefore, you’ll want to make sure that you ask someone you trust and be diligent in making timely payments so as not to ruin their credibility or leave them on the hook with your debt.
Whichever of these methods you decide to use to establish your credit from scratch, be sure that you do so responsibly. If you’re able to secure a credit card or loan, make sure that you practice good financial habits to maintain a good score. Failure to do so could ruin your credit history before you’ve gotten a chance to get started.