The most common “Catch-22” in the world of adulthood is that adults need to have an established credit history to be awarded credit. Whether you are looking to finance a vehicle or establish a line of credit, having no credit history can be a huge obstacle in securing financing. In fact, creditors are more likely to award credit to people with “fair” history than no history at all.
Establishing credit may seem like an impossible task but there are a few easy ways to begin establishing positive credit today.
The easiest route for establishing credit is to become an authorized user on an already open credit card. When an account holder adds an authorized user to their credit card, the credit card company issues the authorized user a credit card. As soon as the authorized user is added to the account, the credit card company will begin to report account activity to the credit bureaus for this user. For this method to work, the established credit card should have a long account history, have a high credit limit, and the account holder should have a pretty stellar credit history.
Open a Credit Card
Even for people with no credit history, several credit card companies are designed to help you build credit. These credit card companies will often offer credit cards with low credit lines for users with limited credit. Be sure to take a close look at the terms offered by the credit card company to find the best rate and lowest annual credit card fee.
If you are struggling to find a credit card for users with no history, look into opening a secured credit card. Secured credit cards offer credit to users who make an initial deposit. Often, the credit card company will issue a refund of the initial deposit once the user has maintained a healthy account for some time.
Ask for a Co-Signer
If you are looking to make a large purchase, such as a vehicle, then you may be worried about having the time to establish a credit history. Most lenders will be willing to consider approving a loan with a credible co-signer. Asking close friends and family members to co-sign a loan with you is a huge commitment. However, this is one of the best solutions for getting your credit application approved with little to no history.
Use a Credit Building Tool
If none of these options are appealing to you, then you might want to check out some of the credit building services offered today. These services give users a “loan” for a savings account. Approved users agree to pay the monthly fee, and at the end of the loan, they have a savings account and a paid-off loan on their credit history.
Building credit is not an intimidating goal. Take the process step-by-step and make sure to always make on-time payments. If you can do that, you will be in the top-score tier before you know it.