How To Get Credit With No Credit History

The age old question of how to get credit without credit history is really not as complex as one might imagine. The simple answer is you have to establish credit. While this may seem like a daunting and often frustrating task when you first start out, it is not impossible. It is important to remember that everyone at one point in their life has been faced with the exact same dilemma. The more important issue is not necessarily how to get credit, but how to get good credit with no credit history. Having credit is not enough in this economy; in fact good credit is not enough these days. People who have no credit are actually in an enviable position in that they have the opportunity to get it right the first time around. It is far easier to build credit from the ground up than to repair bad credit. Here are a few steps to help consumers with no credit history establish excellent credit.

• Understand credit- There are many misconceptions and downright untruths floating around about credit that often lead people to make mistakes when managing their personal finances. The first thing you can do when starting out is take the time to learn why credit is important, how your credit score is calculated and how certain actions will effect your credit rating.

• Review your credit report- An often overlooked step that in some cases can provide a lot of valuable information. In the majority of cases, a person without credit will not have information on a credit report. There have been instances however where a person pulls their credit report and finds information that is either incorrect or downright fraudulent. This may be due to the wrong information being reported under your name or the worse case scenario of identity theft. Take the time to find out what lenders are seeing when they pull your report and if there is information that is incorrect, take action to remedy the situation before trying to build credit.

• Open bank accounts- The first step toward creating a history of responsible financial behavior is by opening a checking and savings account. This is not only necessary to pay bills and save money but it also shows you are serious about managing your personal finances. Lenders consider bank accounts a sign of responsible and stable behavior.

• Use credit with caution- A few years ago, college students and young adults were bombarded with applications for credit cards. Those days are over and qualifying for a credit card today is even more difficult than any time in the past. This may make it more harder to establish credit but might pay off in the long run by reducing the amount of debt young adults carry. People looking to establish credit today can start with a secured credit card which basically requires a deposit which is used as collateral when establishing your account. Carefully review the terms before applying for secured credit as some cards charge excessive fees which eat up your deposit leaving little credit available for purchases. Regardless of whether you have a secured or unsecured card, use it sparingly and pay it off in full each month. Pay your bill on time, every time and you will begin to show a pattern of responsible spending habits as well as proving you able to repay your debt.

As you can see establishing credit is not really that difficult. It does however require time, patience and the ability to manage your finances in a way that proves your credit worthiness to future lenders. The era of easy credit is over, at least for the next several years so do not be discouraged if it takes time to build your credit. As long as you live within your means, pay your financial obligations on time and avoid incurring excessive debt you will eventually be rewarded with a solid credit history.