How to Build Credit from No Credit History

After school, one is now left with the huge task of facing life head-on. At times, this means getting your first credit card that will help you to clear out your bills and other expenditure.

Getting approved for credit used to be a simple process, unlike today, where one is subjected to numerous screenings. You can simply fill out the application forms well, awaiting a reply from the issuing bank.

After a while, you get the feedback that your application was rejected. But how could this happen, yet you had never taken any loans before? Surprisingly, the fact that you have not received a loan previously could minimize your chances of getting a loan.

So how do you build on your credit history? Take a look at these few simple steps that can help you out.


Building credit with a credit card

Credit cards are handy when you wish to build your credit. However, they can also be a clear route to sink in debt if you do not use them wisely. Here are some ways you can use a credit card to build your credit score:


1. Open your first credit card account

Opening a credit card account might not be a difficult task if you have ever had a brief credit history. This can be achieved through the rent, student loans, or even the repayment of utilities such as water and electricity.

Once you get the credit card, you should only take on small charges that you can repay without fail. Doing this improves your credit scores and paints you as a responsible and reliable person.


2. Get a secured credit card.

This is one of the best ways to use credit cards to build credit when you have a negative or no credit history. These types of credit cards are often tied to the savings account where the lender can offer you credit based on the amount in the savings.

From there you have to spend small charges which you can repay in time. Even though the lenders might not report your timely repayments to the credit bureaus, they can ultimately convert it to a regular credit card.


Building credit without a credit card

1. Paying student loans

If you have been through college, the chances are that you might have taken some loans to finance your education. These student loans are reported to credit bureaus. Making your student loan repayment on time every month will do a great job of building your credit history.


2. Taking out an auto installment loan

An auto loan is pretty simple to get as long as you take your time to get the best possible deals. Companies that offer such auto loans may not need to check out your credit history, but other means can be used like having a cosigner. Once you get the auto loan approved, you have to make the repayments in time without fail, as this will also improve your credit.


3. Obtain a secured loan

A secured loan works the same way people use credit cards to help them to build their credit scores. These credit-builder loans, passbooks, or CD loans are used by people who have deposited some cash in an interest-bearing bank account. They can thereafter borrow against that amount. If you repay the credit in time, your credit gets built.

Credit cards are powerful tools that can help you achieve financial freedom and to achieve your goals. Our simple guide on how to use credit cards to build credit within a short period has also been tested and proven, so you shouldn’t experience any problems.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.