The ability to buy or burrow goods without paying for them without paying off upfront sounds pretty impressive. However, no credit will mean banks and credit unions won’t trust you with loans and lines of credit. Having a higher credit score and credit will mean your loan applications will probably be accepted, and you may even get charged a lower interest rate. If you want a credit card, you must have a good credit score.
If you are an adult with no credit history and are looking to build your credit, we are here with some great tips to assist you:
1. Borrowing money from official lenders
You can borrow money through a credit line or a loan to build your credit. If you are 21 or over, you are eligible to get a credit card. If you are younger, you will need either a co-signer or prove that you are financially independent enough to repay the amount. Getting your first credit card will probably be challenging, but some more accessible options are: secured credit cards, joint credit cards, or retail credit cards. You will readily get accepted for these, and the terms are good enough.
You can also ask your local banks and credit unions if they will offer you a small installment loan to help you build your credit
2. Find a suitable job
Your job doesn’t impact your credit score directly at all. However, it’s a deciding factor in whether your credit card requests are accepted. If you don’t have a stable job or decent income source, the chances are that your loan applications will get rejected. Usually, having a steady job and a constant source of income makes you more likely to get qualified for most loan types.
3. Credit builder loans
Taking out a credit builder loan is one of the more accessible and fastest ways to build your credit score. Credit builder loans allow people with no credit history or a bad credit score to build their credit. Instead of the credit being transferred to the borrower’s credit account, it gets transferred to a savings account. It also requires the borrower to pay in full first before they can get access to the loan money. This is great for people who have saved up decently and are looking to build their credit.
4. Repayment of installments on time is important
Once you have secured a loan account, make sure you repay the installments on time. Your lender will record each payment and, later on, will send the records to the three major credit bureaus. After your account has been active for at least six months, a FICO score is generated based on your credit history. It will probably be on the lower side if you are just starting, but with time, it will go up as your credit history becomes longer. As your account gets older and you open more loans or credit accounts, your credit score will improve too.
Building your credit score from scratch sounds pretty daunting, and it honestly is you don’t know what you are doing. You can start building your credit score with a nudge in the right direction. It would help if you always remembered to pay off your monthly bills on time while trying to improve your credit score. Another thing to note is that you should only borrow what you can afford to pay back. With a bit of care, you shouldn’t have any problem. We hope this helps you find the right ways to start your credit history.