The catch-22 is that it takes credit to get credit. One good way to begin establishing credit history is by using a credit card responsibly, but in order to get approved for a credit card, lenders usually want to know that you are a good credit risk. In some cases, no credit can be nearly as debilitating as having poor credit. However, due to recent regulatory alterations, lenders now also must consider a person’s capacity to repay their debts in addition to their credit score when determining whether or not to extend them a line of credit.

Here are some things that a lender may look at if you are applying for a credit card without any prior credit history or limited credit history:

Savings, checking or other bank accounts.

You don’t need to have any sort of credit history to open up a checking account at a bank. Because previous credit is not required to have a checking account, any activity on the account does not get reported to any of the credit scoring bureaus. However, showing lenders that you have one or more bank accounts in your name can go a long way in encouraging them to extend you your very first line of credit.

Job/employment history.

Lenders may also be interested in reviewing your employment history when trying to determine whether or not you are a good candidate for them to offer credit to. If you have demonstrated an ability to hold down a steady job, there is a very good chance that you will seem more appealing to lenders.

Where you have lived.

Another thing that will be scrutinized is your residence history. How often you move, whether you rent the place in which you live or own it – that is the type of information that will be of interest to lenders. The more stable you appear in terms of your dwelling, the better, as far as lenders are concerned. Statistics have proven that people who own assets such a house or an apartment are safer credit risks than the average citizen by as much as 20%.

Bills in your name.

If you can, arrange to have some of the utilities where you live put in your name, such as the telephone, electric, water, gas or cable account. Although having your name on such accounts won’t build up your credit history, it can give first-time borrowers a little bit of a positive boost in the eyes of lenders.

In fact, all of this sort of data is being analyzed more and more often by lenders when considering the appeal of all potential borrowers, not only those without much credit history to show for themselves.

Typically, if you are without credit history, you are starting out in your adult life, as most college students or young people are often in this predicament. Once you start maintaining a credit history (and hopefully it’s a good one) this will no longer be a problem. Once you’ve worked your way through several credit cards as well as loan repayments, you will have one.

For the time being though, the odds are strongly in your favor of getting an auto loan, even without a credit history to back you up. It will be tough but it can be done.

Automobile loans are secured loans, first and foremost. This means that some assets of yours (possibly even the automobile in question) will have to be labeled as “collateral” should you default on your loan.

In that way, auto loans can be nearly golden for establishing a credit history or rebuilding a poor one, even. You could also have a friend or family member that trusts you co-sign on your loan. Of course, if you should default, they will suffer, so this might come as an extra burden.

The co-signer must also have a good credit history of their own. If you pick someone with a poor credit history, you are probably not going to be approved.

You also run the chance of having a high rate on your auto loan, because of your rather non-existent credit situation. If that’s the case, it is possible to reprimand this by making on-time payments for the first six months.

Some car dealerships have programs that come with a “no credit check” promise, too. Remember that dealerships will do nearly anything to attract potential customers, so this policy is in their best interest.

If you have “bad” credit and need to take out an auto loan, your rate will be much higher than someone else with good/average credit. If this should happen to you, what you should do is somehow decrease the term of your loan.

The best thing you can do, though, is to take the time to establish a real credit history. This can be done by signing up for one credit card or repaying a loan with its proper stipulations.

A credit history is something absolutely necessary when making other monumental payments or even when applying for a job. It reflects (to whoever wants it) your financial responsibility and habits. Thus, it determines your reputation and determines, to some degree, if you are really a desirable candidate for whatever it is you need the credit history check for.

However, it takes time and patience to build a credit history and sometimes these run short. If all else fails in your quest to acquire an auto loan with limited credit, you could ask a friend for a personal loan, as well.

Whether you’re beginning college or this is your last semester. College is a pretty big and expensive ordeal. If all goes as planned, you can expect to go to class daily, meet up with friends, and finish up in four years with a degree. What you might not expect to be doing is dodging credit card offers and running from debt.

Here’s how to stay out of college debt:

Stay Away from Enticing Offers: While the CARD Act attempts to prohibit credit card issuers from campaigning on college campuses, chances are that if you’re on campus, you’ve already been solicited. Over 75 percent of students report that credit card companies have targeted them through tables on or near campus, according to a study by the U.S. Public Interest Research Group.

While the giveaways may seem worthy of your personal information, college students should be wary. When credit card bureaus assemble your credit report they look at each credit card application, and the number of credit cards and inquires when putting together your credit score.

Read the Fine Print: It’s important to cut through the smoke and choose a credit card that works the best for you. Before you go to college, it makes sense to establish a checking account. While the two cards are different, a checking account can teach you bits and pieces of money management. For your first checking account, consider opening with a parent to ensure that you don’t miss any payments or if you run out of money, you will know where to get more.

Get a Credit Report: After you have understood the basics of monitoring a checking account, you should proceed to find your credit score. Free websites like www.freecreditscore.com help you find out where your credit score stands. Once you get the score, you will know which cards are more likely to approve you or suit your needs.

Spend Wisely: After you get the card, use it wisely. Having a credit card may seem like a blessing, because of an instant access to funds, but it can also hurt you when your spending habits get out of control. It’s important to exercise discipline when using a credit card; it makes more sense to use it to purchase expensive items that you normally couldn’t afford –as it will break down the lump sum into smaller and more manageable payments. Items such as laptops, cameras and other electronic equipment should be paid for with credit. It makes very little sense to use your credit card to buy your daily caramel Frappacino. In the case of the latter, the debt will last longer.

All in all, it’s important to know what you’re getting into before you get into it. College is a place ripe with new experiences, and credit debt is a trip you don’t want to take. Credit card lingo can be very confusing, so make sure you understand the terms and conditions outlined in the particular card you choose. Interest rates tend to go up after the first year, so make sure you know what your zero interest rate will turn into in 12 months.

Prepaid cards

Prepaid visa cards are the best option for those with no credit history. These cards offer the same benefits as normal credit cards including online purchases, getting rid of cash payments, rewards, cash back offers and also credit reporting to the credit bureaus. They also don’t pose the threat of late payments and over the limit fees. You get what you pay for minus the processing fee, which too could be waived off in some cases, depending upon the prepaid card you purchase. Prepaid cards can be obtained from retail chains and even gas stations and departmental stores. The two things you need to check are whether the credit will be reported for those cards and whether there are exorbitant charges levied on them.

Secured credit cards

Credit cards can also be acquired by paying security deposits, which come with added incentives like free direct deposits and bonuses for on-time payment deposits from time to time. You can extend your credit line to as much as $3000 with secured credit cards. As you make consistent payments over a period of time, you will be entitled to extension in credit line without increasing your security deposit either. These cards offer more favorable terms as the risk is lowered due to the security deposit.

Payday loans

There are many lenders that offer payday loans without any credit check as long as you have an income proof to show. Payday loans are loans ranging from a few hundred to a few thousand dollars, but on time payments will ensure that you have something to show for on your credit file to enhance your creditworthiness for future applications.

Instant credit cards

Not all credit card issuers look for credit history. Some cards are offered without credit checks or issuance fee. However, such credit cards are also accompanied by higher interest rates and higher penalties. Those with no credit history will be able to apply online for such cards and can be approved for the card almost immediately. However, caution needs to be exercised as far as using such cards and making on time monthly payments are concerned. Missing out on the payments could spell trouble for your credit score, even if you have managed to build something.

Credit cards with co-signors

You can also go for credit cards with a guarantee from a co-signor. Student cards are a good example. However, if you miss payments or incur penalties the bad credit will reflect on the credit file of your co-signor too.

Pros of having no credit history:

• Having no credit history means having no credit cards or loans. Being in such a financial state is certainly better than being in debt.
• People without the debt situation can manage the flow of the money in and out of their accounts since they know exactly what they spend on and how much more leverage they have. Without credit, it is impossible to cross that limit.
• Since there is no credit history, there is no lure of credit cards and unnecessary purchases just to make use of the offer that the card gives. Also, a good savings plan can be put in place without any debt that should be paid off.

Cons of having no credit history:

• Since credit history is the most referred document in financial world, having no credit history does not establish the credibility of the individual, which gives rise to a lot of problems.
• Getting loans like auto loans and housing loans become almost impossible without a credible financial history. Credit scores will make the job much easier.
• Even if there is no loan requirement, credit history plays an important role in all other daily activities. Apartments, utilities like cable, electricity and much more all come with a credit history check, to verify the credibility of the individual. Having no credit history makes it very difficult to get along with all these situations.

How to deal with No credit history:

Having no credit history is not the end of financial life. There are many ways to get around the situation although difficult.

• Credit history can be replaced with documents like recommendation letters from employers, universities, or previous land lords and even banks where the account is kept.
• There are many ways to build credit history if the individual wants, and many ways to avoid it as well. Credit history can be successfully built by applying for personal loans with very high interest rates, secured credit cards, and the likes. High interest loans and secured loans do not need credit checks, but will report the activity to the credit check union.
• Apartments and utilities can be obtained with valid income proof, recommendation letters from employers and so on. Many apartments that belong to individual owners can be rented without credit checks. Personal loans on the internet do not need credit checks but will have a specified low time frame for payback. Payday loan is one more option to explore which does not need credit checks.

Personal loans and other loans like home loans and auto loans will be needed at some point of time. Without a valid credit history, obtaining these loans from reputed organizations are almost impossible, since they need a credit history to ensure the credibility of the borrower. Housing loans are impossible because money lenders will not be prepared to lend such big amounts of money without a valid proof of credibility. Building a sound credit history before applying for home loans is a necessity in order to get good interest rates and complete loans. Credit history can be built by taking loans in small amount from money lenders who do not need credit checks. But they must report the loans to the credit history bureau in order for the borrowing and repayment to be on the record. These small amount personal loans can be obtained from online money lenders for a limited time period within which the amount has to be returned. Also, payday loans which can be taken with the help of an employment record, and the loans have to be returned when the next paycheck arrives. Although relatively small amounts, these loans give an idea of the whole process of borrowing and returning the loan amounts in time.

Applying for new credit cards is another way to build a strong credit history. But any new credit card application requires a credit check to be approved of. There are a few credit cards that can help build a credit history before applying for a card from a reputed company. Secured credit cards are available in any bank, where the individual applying for the card agrees to keep a security deposit. The credit limit will be set according to the security deposit and the card can help in learning how to handle credit cards. Other option is to apply for add-on credit cards with a cosigner. But the bill payments will have to be done diligently because the cosigner will also be responsible for the missed payments, and his or her credit history will take a hit. Department store cards can be of help if they report the activity to the credit bureau. They are free to apply, and can be used for purchases only within the department stores. Although they are high interest cards, they are worth it, if a valid credit history is built. Although having no credit history means never having to face debt, it is one of the most important financial documents which is a necessity is today’s credit driven economy.

No credit Loans

Loans are very necessary when it comes to resolving a financial crisis. But obtaining loan is not easy without going through a credit check first. All loan companies depend on credit checks to ensure that the person applying for loan is credible. But there are ways for people with no credit history to obtain loans too:

• Money lenders usually provide loans without credit checks for little higher interest rates. Short term loans that have to be paid off within a year or so will be available too, for some extra money.
• Employment record can serve as a proof for credibility, instead of credit checks. For loans without credit checks, employment records must be presented at the time of applying for the loans.
• Having a cosigner might help in getting better rate for the loans. But finding a cosigner is not that easy, since the person signing up must be willing to take the risks in case the loan cannot be paid off.
• Payday loans can be taken if there is a crunch at the end of the month. This must be returned immediately though, otherwise the penalties can be quite high.
• Talking to local banks may be one option to get a no credit check loan. Since they hold the account of the applicant, credit check may not be necessary.
• Automobile loans can be obtained from the dealer selling the automobile. Although the interest rates are higher than the other banks, it saves a lot of paperwork associated with credit checks. This facility may not be available with big and popular auto dealers.
• Home loans need a bit more work, since the amount required is a lot higher. Getting recommendation from landlords, employers and colleagues will help strengthen the application.
• Checking in the local papers for no credit check loans can give an idea about the loan companies and banks lending unsecured loans.

Taking a loan not only helps relieving financial tensions, but also helps in building credit history. If a person is planning to apply for credit cards, loans are a great way to build a good credit history and get approved for a credit card.

Credit cards with security deposits

There are many credit card issuers who offer the option of security deposit as an alternative to no credit history. No credit history means lack of credibility, thereby translating to a higher risk for the credit card issuer. Hence in those cases, the card holder is expected to pay a security deposit upfront and the credit limit available on the credit card would be equal to or a percentage of the security deposit. If the card holder doesn’t repay the dues on time, then the card issuer is free to claim the security deposit from the customer account. If the customer needs to use the card, then he or she will have to replenish the security deposit. However, a card holder can leave the security deposit as is and make regular bill payments, thereby improving their credit history significantly. Eventually, the card holder can even negotiate for a no security deposit, credit card, which is a logical progression, considering their improving credit score.

Prepaid credit cards

Some gas stations as well as retail chains sell prepaid credit cards and report it to the credit bureaus. Those with no credit history can certainly start with such cards and manage all their expenses through those prepaid cards. Over a period, their spending can be tracked and audited, and hence their credit score improves too. However, card holders must be careful while choosing prepaid credit cards. Some of them charge obnoxious penalties and processing fees thereby reducing the limit on the prepaid card to a great extent. Such prepaid cards don’t prove to be a useful commodity and could burn a hole in your pocket.

Bad credit, credit cards

Credit cards are offered by some lenders for those customers with a bad credit history. However, it goes without saying that such credit cards usually have numerous pitfalls. The card holder needs to be extremely careful as the interest rates on these credit cards are very high and so are the penalties. So the best way to use those cards is to make only necessary expenses and pay the bills on time. That way you will have a credit history to show for over a period of time, giving you a better chance to switch to a lower interest credit card in the longer run.

There are two options available to you if you have never had credit cards before. You can start small; opt for a prepaid or secured credit card. This is often the best way to begin especially in college. It will allow you to have more control on your spending as the credit limit will depend on how much money you can put into your account. You may not be able to always spend more but this will be a healthy way to get used to having a credit card. In addition many secured cards have an option by which you can ensure that it gets reported to the credit bureaus.

Another way to sort out the problem with no credit history is by deciding to opt for a joint card. There are situations where if you opt for a joint card with a parent or a sibling who has excellent credit history you can easily get your first credit card. But this is a risky thing to do, if you make a mistake or miss out on a payment; it will cost both of you dearly and will affect both your credit reports irrespective of whose mistake it is. Make sure that you do your payments regularly and don’t end up spending more than you can afford to pay off.

People can also opt for a credit card from a bank where they have had a salaried account for years together. This will mean that they have a working relationship and with an account in the bank, they will be willing to offer you a good deal. Even if you get a lowered credit limit to begin with, it’s better than nothing at all. Slowly you can improve your credit history and credit scores. Make sure that you discuss the option of a lowered APR as well if possible.

Having no credit history is not necessarily the end of all your credit card dreams. There are ways to be eligible for cards and to work your way up the ladder. You can even opt for some store credit cards while you are at it, learning how to use them and making your payments correctly. Sometimes these can also be used as a means to getting your first ever credit card. Remember, these cards when used right will be a good bet always.

When you want a credit card and have no credit history, you need to bear in mind that the important fact is to prove that you are reliable to bankers. Therefore, having the right papers on hand is important. Firstly, you need to have proof of reliable and secure income. Once you can prove to the bank that you have a regular source of income, then getting a credit card becomes easier. It is wiser therefore to look for credit cards from the bank where you have your salaried account.

There are many ways to establish some kind of credit history for the banks to rely on. You can start small by opting for store credit cards. These will be easy to get and the amounts are easy to pay off being quite small. There is no shortcut or easy way to establish credit. Like with beginning a job, you need to start small and then work your way up the ladder. Once you have consistent records of paying the amount every month on the store credit card, you can look at applying for a credit card. This will serve to alleviate your no credit history.

Another way to deal with no credit history is by going for prepaid or secured credit cards. All you need to ensure is that the prepaid or secured card you opt for will be mailing out statements every month to the credit bureaus. This will help you to establish a credible financial statement for the banks to rely on. With both prepaid and secured credit cards, you can definitely build your credit history easily enough. Since the card is already paid for and your spending power depends on how much you can afford, there is no chance to make mistakes here.

When you have no credit history and are looking for ways to improve, then you must start with the right resources. It is important to understand that everyone with credit cards began the same way. Right from the beginning; make sure you pay off whatever money you charge to the card every month. This will automatically ensure you end up with good credit scores. Spending responsibly and learning to use your money carefully will be the stepping stones to establishing a good credit score over time. Once you have good credit history, getting any kind of credit card will be easy.