How to Establish Credit If You Have No Credit History

Establishing credit takes time but is not difficult.

When you have no credit history, you can get along for a good while; however, it will eventually become a major inconvenience. You will find it impossible to buy a house, buy a car or even rent a car, even if you are an upstanding citizen who always pays faithfully by cash and check. Establishing credit is not difficult but will take time.

Things You'll Need

• Read this article
• Have a plan
• Self discipline
• Read my other article abou how to build up your credit scores

Instructions

1. Take advantage of credit card offers received in the mail, particuarly if you are a college student. Start with a low limit and request an increased amount after you have earned a good standing with the company. Keep in mind you are trying to build your credit history so always use the credit wisely and timely pay your monthly bill.

2. Open a savings account with your local bank and apply for a secured credit card. Start with $200 to $500. With this money you are basically establishing your own credit line because you can only borrow against that figure. If you have not paid in full by the end of your grace period, then the bank will charge you interest. Use the card for your daily purchases and write a check or transfer money from your checking account to pay it off right away, if necessary, to avoid paying interest.

3. Apply for a gas card once you have had a secured credit card for some months. Gas cards are easier to obtain for credit newcomers.

4. Shop at your favorite department stores and open a credit line instantly there and save additional percentage on your initial purchases when using your store card. Again, write a check or transfer money from your checking account, if necessary, to pay it off right away and avoid interest charges.

5. Shop at online electronic stores or computer stores. When you are ready to buy a laptop or computer, you can be sure to get the credit you need, provided you have done the previous steps. Again, pay it off right away.

6. Get car loans and mortgage loans at decent interest in about a year or two. With four to five active credit lines in good standing, you will qualify.

Tips & Warnings

• Go to a bank that offers free online transfer and bill pay service. Schedule your payment for bills ahead so you can be sure all your credit card payments are made before you receive your statements.

• If you do not have the cash to purchase anything, do not charge it to your credit cards.

References

• Immihelp: Establishing Credit History