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No Credit, No Problem?

On Behalf of | Jun 6, 2018 | Consumer Protection

Have you ever applied for credit and been rejected because you have no credit?  Getting approved for credit is next to impossible when you have little to no credit history.  This cycle seems impossible to overcome, because if you have no credit how are you going to get approved based upon your credit history?  So while no credit is not the same as bad credit, following these simple steps to getting credit will help you build a credit history and set yourself up for the future.

Apply for a Secured Credit Card

First, apply for a secured credit card.  Secured cards work because you must first make a deposit towards the card.  Thus, when you make purchases using the card, you can only charge up to the amount you put down.  This amount is considered your credit limit.  The creditor holds your money in an interest-bearing account and the account reflects positively on your report, helping establish a positive payment history because the card is pre-paid.  After a reasonable amount of time paying on the card in advance, most creditors will offer to turn the account into a standard unsecured card and eventually begin to increase your credit limit as you continue to pay in a timely fashion.

Also, consider applying for a beginner charge card.  Beginner cards include low-limit gas cards and retail store cards.  These cards are easier be approved for than a standard bank card, but beware of their extremely high interest rates.  Try using these cards to purchase necessities and never charge more than you can afford to pay off in full at the end of each month.  Financial experts say, as a rule of thumb, try not to charge more than 30% of your available balance.

Become an Authorized User on Someone Else’s Credit Card

Second, if you are trying to build your credit history, consider becoming an authorized user on a credit card with someone who you trust and who has excellent credit.  Becoming an authorized user is a great and easy way to build a positive credit history.  While you will only be listed as an authorized user on the account, it will still be listed on your credit report.  In an effort to make sure that your credit history is not compromised, never charge more than you can afford, pay off the balance in full every month, and make sure you can trust the  primary credit card holder to do the same.

Request Rent and Utility Payments to be Reported on Your Credit File

The third and final method to building credit is to request for rent and utility payments to be reported on your credit file.  If you are a renter, ask your landlord to report rental payments on your report.  If you are timely every month with your payments, request the payment history be added to your report.  Timely rental payments can boost your score and provide you with the positive credit history you are looking to build.  Likewise, adding utility bills to your report can help build your credit history.  If you have a regular and timely payment history, request bills such as your cell phone, water bill, electricity bill and others utilities be added to your report with each of the big three credit reporting agencies, Equifax, Experian, and TransUnion.

Building credit history does not have to be impossible.  Start slow and be responsible and in no time, you can have pristine credit as your foundation.  If you are in need of advice or assistance from a licensed attorney, contact SmithMarco, P.C. for a completely free case review.