How to establish credit with a no credit history

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » How to establish credit with a no credit history

How to establish credit with a no credit history


Updated: April 8, 2013

Obtaining a credit card or any other kind of loan can be quite frustrating especially when you have no credit history. Establishing the initial credit history can also be quite tricky. When you don’t have credit, there are not too many places that will be willing to give you credit and then if no one is willing to give you credit, how will you able to establish credit, as you will have to start from somewhere. Firstly, it is important to understand what the lenders are looking for.  Now if you are looking forward to establishing credit for the very first time, then what can lenders possibly look for? They cannot look at your FICO score to determine if they can lend you money or not.  In such situations, they will be examining the other factors which will help them make a decision if lending will be risky or not. Bank Accounts:  One does not need a credit score to open a checking account at the local branch. Since these accounts don’t require any credit to open an account, they don’t get reported to the credit bureaus.  However, your account history could play a vital role as lenders will consider this when you wish to apply for a credit card or avail loan for the first time. Employment History: The most important factor that lenders will look into is your employment history. They will want to see if you can hold on to a job, or if you keep shifting. They will also look into periods of unemployment. Holding on to a steady job will help in getting approvals easily. Residence history:  Lenders will be interested in seeing if you move house very often, if you rent a place, or if you own a home.  This is probably as important as the employment history.  It does pay to have a permanent residence. Joint ownership of a home along with a spouse also holds well in most cases. Utilities in your name: It is possible to have many utilities in one’s name even without having a credit history. Having a telephone connection, gas, electric, cable or water connection in one’s name is also of great benefits. This will not be used to establish a credit score, but it will certainly help first-time borrowers. Starting with the bank is always a good idea to establish credit.  Opening a checking or a savings account in a bank has dual benefits such as: • If you have a good standing in any of the bank accounts that are active, then you are sending the message that you are responsible enough to manage money. These bank accounts are not necessarily part of your credit score but lenders could use this bit of information to come to a conclusion if you are a credit risk or not. • If you have a good rapport with the bank it helps in improving your chances of obtaining a credit card or a loan through them as they will value your business with them.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Posted: February 12, 2018

Days are getting longer, snow is melting and you already feel the lightest breath of warm breeze on your face - spring is here. Summer holidays are looming, and so is Easter with its shopping. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!