4 Ways to Build Your Credit History When You’re Starting out in Life

You can only get by with cash-only purchases for so long. Here’s how you can start to build your credit history for things like a house or car loan.

Whenever you try to buy a home, a car, rent an apartment, or get a job, people look at your credit score. Lenders pull your credit score to see how creditworthy you are. As you can see, that single score can determine a lot in your life.

What if you’re among those who don’t have a credit score? There are about 45 million people who are credit invisible. That can make these regular things difficult to obtain.

If you fall into the category of credit invisible, read on to find out how you can build your credit when you have no credit.

1. Secured Credit Card

When you apply for a credit card, most of the time, they’re unsecured. That means that you don’t put up something as collateral.

Banks take a lot of risks when they lend money, which is why they rely on credit scores so much. Limiting their risks stops banks from losing money.

With a secured credit card, you put down a deposit to open the account. This is usually between $250 – $500. The deposit is equal to your credit limit.

You use the credit card as you would normally use a credit card, and you have to pay your bill on time each month. That shows the bank that you’re responsible with credit and will build your credit score. 

After several months of on-time payments, you can ask the bank to transfer your secured card account to an unsecured account. 

2. No Credit Loans

Some lenders offer loans for people that don’t have a credit score. A no credit cash loan can be a small dollar amount loan that helps you build your credit.

You have to carefully read the terms of the loan and make sure that you pay the loan back in full when it’s due.

3. Student Credit Card

Credit card companies realize that many students need a way to build up a credit history. They will offer students the opportunity with unsecured credit cards with small credit limits.

On the downside, these cards tend to have higher than normal interest rates.

4. Get a Co-Signer

If you need a larger loan or you’re trying to get an apartment, you can always get a co-signer. A co-signer can be a friend or relative with great credit that agrees to make the payments on the loan or rent if you miss a payment.

That gives the lender or landlord extra assurances if you prove to be financially unstable. On the downside, that can cause a rift in your relationship if you don’t make your payments on time.

Easy Ways to Build Your Credit

When you are just starting your adult life, there’s a lot to navigate. Unfortunately, a lot of things depend on your credit score.

There are ways to build your credit without too much stress. You can get a secured credit card, a card just for students, or get a co-signer. You can start your life like a boss and have great credit.