You are most likely conscious that having a poor credit score rating or a credit score report loaded with purple flags will make it very troublesome to borrow cash when it is advisable to. However what in case your concern is not an unfavorable credit score historical past, however relatively, an absent one?
Should you’re new to the working world, you might not have sufficient of a credit score historical past but to qualify for a credit score rating. And never having a credit score historical past may very well be an instantaneous turnoff for lenders, as a result of it sends the message that you have by no means needed to handle any payments earlier than and due to this fact aren’t established as a reliable borrower.
In fact, folks and not using a credit score historical past are likely to land in that irritating catch-22 state of affairs — you haven’t any credit score so you possibly can’t qualify for a mortgage or bank card, however you possibly can’t construct credit score with out having well timed mortgage or bank card funds to point out off. It is a powerful spot to be in. So if an absent credit score historical past is holding you again, here is what to do about it.
1. Open a secured bank card
With an everyday bank card, you are given a spending restrict to stay to primarily based on elements like your creditworthiness and earnings. With a secured bank card, you set down a deposit that serves as your private spending restrict. However then, as you cost bills on that card and pay them off on time, that optimistic exercise will get recorded that can assist you set up a credit score historical past.
2. Get added as a licensed person to a different bank card
And not using a credit score historical past, you are unlikely to qualify to open an everyday bank card. However when you’ve got a mum or dad, sibling, or one other particular person in your life who’s keen so as to add you as a licensed person on a bank card, it may show you how to set up a credit score historical past of your individual.
Every time there’s exercise related to that account, it’s going to get added to your credit score file as nicely when you change into a licensed person. What this implies, although, is that you will want to verify the one that provides you to their bank card is a accountable borrower who pays on time.
3. Be certain that your whole payments are recorded
Whereas your timeliness in paying a mortgage or bank card invoice will get recorded as a part of your credit score historical past, on a regular basis payments aren’t usually tracked the identical manner. A great way to determine a credit score historical past is to verify these payments do get counted. You need to use a service like Experian Enhance (which is free) to trace your well timed funds for payments like your utilities and cellphone so that you get credit score for managing them responsibly.
Not having a credit score historical past could make for a irritating state of affairs. The excellent news, although, is that there are steps you possibly can take to show an absent credit score file into one which’s extra strong. And that, in flip, may very well be your ticket to getting a credit score rating established so you possibly can start benefiting from completely different borrowing alternatives.