They say, Rome wasn't built in a single day. Patience and perseverance are quite important for most of the accomplishments that you crave for. Credit history too is one such case where one can reap rich rewards over a period of time by being disciplined, patient, committed and most importantly sticking to a plan. You can start with no credit history
and move towards building a good credit history
. Here are a few ways to do so.
Start with a prepaid card
Get yourself a prepaid card from any of the grocery stores, drug stores, gas stations or super markets. Confirm that these places report to the credit bureaus, which means your credit history, will start rolling as you refill your account every month and use it much the same way as a normal credit card. Be careful to avoid prepaid cards, which levy heavy fees and have high processing fees on multiple transactions.
You can go for a secured card too
A secured credit card
is similar to a credit card in all ways except that you make up for the lack of a credit history by making a security deposit as collateral. This reduces the risk of the lender and hence lowers the interest rate on the card too. As long as you keep making monthly payments on time, your security amount remains safe in the account. In fact, if you can do it consistently for a while, you will develop enough credit history to get yourself an unsecured credit card, which is the next step.
Start a checking account and find out if the bank offers a card
This too is one of the ways in which you can develop a credit history from scratch. Many banks will offer you, a card if you have some money deposited in the checking account. By maintaining the card and the account long enough, you can develop your credit history to a decent extent to have a credit line available to you.
Bad credit credit cards
There are a lot of lenders who are willing to provide credit cards to customers who either have no credit history or have a bad credit history. The distinct features of these cards include high processing fees, low credit limit, low rewards and very high interest rates. Therefore, you need to be carefully in order to not run into any outstanding balance because the interests you have to pay will be quite high. It will also undo your effort to build a credit history. By being regular on your payments and keeping the credit card expenditure to a balanced and manageable level, you can develop a very good credit history in a couple of years.
Using loans and mortgages
There are people who take auto loans and pay them off in good time, with regular bill payments in order to improve their credit history. Your consistency in paying phone and utility bills on time will also reward you with a very good credit history, making you eligible for more attractive deals in the future.