How To Establish Credit When You Have No Credit History
If you are trying to build credit, you may be confronted with one of life’s great paradoxes: In order to get credit, you must have a credit history.
If you have no credit history, creditors may treat you the same as if you have bad credit. This may seem unfair, but the reason is that you have not established a history to show that you have the discipline to make payments over an extended period of time.
Fortunately, you can easily establish credit. Here are two ways to jumpstart your credit history.
Many stores will give you a credit card, even if you have no credit history. Start to use it, but don’t buy more than you would buy with cash. Pay off the entire bill at the end of the month. Ask that the department store report your credit history to credit bureaus.
Another way to establish credit is to open a secured-credit card at a bank. This is done by making a small deposit, for example – $500.00. Your secured-credit card will be guaranteed by this deposit. If you fail to make your payments, the bank can withdraw the funds from your deposit.
Caution. A secured credit card is not as good as an unsecured credit card, in terms of credit-building, but it can help you get started.
Finally, you can ask nontraditional creditors, like your electric, heating and water providers, to supply your payment history to a lender.