What to do if no credit history is holding you back


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Don’t have an established credit history yet? Here is your game plan.

You probably know that having a bad credit score or a credit report full of red flags will make it very difficult to borrow money when you need it. But what if your problem is not a bad credit history, but rather an absent one?

If you’re new to the world of work, you may not yet have enough credit history to qualify for a credit score. And not having a credit history could be an instant turn-off for lenders, as it sends the message that you’ve never had to deal with bills before and therefore aren’t established as a trustworthy borrower. .

Sure, people with no credit history tend to find themselves in this frustrating catch-22 situation – you have no credit, so you can’t qualify for a loan or a credit card, but you don’t You can’t build credit without having a timely loan or credit card payments to show. It is a difficult situation. So if an absent credit history is holding you back, here’s what to do.

1. Open a secure credit card

With a regular credit card, you have a spending limit based on factors such as your creditworthiness and income. With a secured credit card, you put down a deposit that serves as your personal spending limit. But then, when you charge expenses to that card and pay them back on time, that positive activity is recorded to help you build a credit history.

2. Get added as an authorized user to another credit card

Without a credit history, you’re unlikely to be qualified to open a regular credit card. But if you have a parent, sibling, or someone else in your life who wants to add you as an authorized user on a credit card, it could help you build your own credit history.

Any time activity is associated with this account, it will also be added to your credit report once you become an authorized user. This does mean, however, that you will need to make sure that the person adding you to their credit card is a responsible borrower who pays on time.

3. Make sure all your invoices are recorded

While how quickly you pay a mortgage or credit card bill is recorded as part of your credit history, everyday bills aren’t typically tracked in the same way. A good way to establish a credit history is to make sure those bills are counted. You can use a service like Experian Boost (which is free) to track your timely payments for bills like your utilities and cell phone so you get credit for managing them responsibly.

Not having a credit history can create a frustrating situation. The good news, however, is that there are steps you can take to turn a missing credit report into a stronger one. And that, in turn, could be your ticket to getting a credit score so you can start taking advantage of different borrowing opportunities.

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