I Have No Credit History–How Can I Start Building Credit
At times, having no credit may be just as burdensome as having bad credit. Lenders do not want to lend money to consumers who have not established credit. It may be very hard for them to determine if the lender will repay the loan or default. Not all lenders are hesitant about lending to consumers with no credit history. Consumers have an abundance of choices when it comes to building credit.
How to Build Credit
- Purchase a home. Many consumers may qualify to buy a home through a first time homebuyers program. Consumers who do not have any established credit may qualify for a loan to purchase a home. Making payments on time is the fastest way to increase credit scores.
- Apply for a secured credit card. Consumers love secured credit cards because they can help them build their credit. Lenders report the payment history to the credit agencies so consumers benefit. Consumers should make sure that they get a secured credit card with a low interest rate, and they should not use more than 30% of the available credit.
- Apply for an unsecured credit card. Lenders are more likely to offer unsecured credit cards to consumers because the credit cards requires a security deposit that is usually equal to the line of credit. Lenders usually transfer the unsecured credit card to a secured credit card account after the consumer has established a good payment history.
- Purchase a car. Some people make their first purchase a car. Lenders will likely offer an auto loan to lenders who have not established credit. Consumers may even receive great interest rates on the purchase of their new car.
- Find a co-signer. If lenders do not want to extend credit, it may be beneficial to get a co-signer to assist. Parents and other family members make excellent choices for co-signers. Lenders will consider the excellent credit of the co-signer when making the decision to offer credit.
- Apply for a bank credit card. Consumers should consider applying for a credit card with their personal bank. Personal banks are very likely to offer credit cards to their customers. They may even offer low interest rates and additional incentives as a thank you for doing business with them.
- Apply for a title loan. Some title companies allow consumers to receive loans for the title of their vehicles. Some companies require a clear title and others do not. Consumers should make sure that the title company reports the payment history to the credit agencies.
- Rent from a property owner. Consumers may want to rent a home or another property from a property owner. Many property owners report the payment history to the credit agencies and this can help build credit. It may be a good idea to ask the property owner if they report to credit agencies before moving into the property.
There are more ways than one to build credit history easily. Consumers may have to start out with small lines of credit before receiving large loans. Building credit history is the most important thing that consumers can do for their financial future.