Credit history is a record of a person’s financial transactions which shows his borrowing and repaying activities.
There are a number of reasons, why you may not have a credit history. One main reason is age. You have to be 18 years and above to hold a credit card. You can have a credit card even if you are under age, if you show a steady income or if your parent gives a surety for the credit incurred by you. In case you are not able to pay back the credit on time, your parent has to clear the debt.
Another reason could be that you are used to paying by cash and you don’t have a bank account, so no credit card and no credit history. Sometimes it so happens that you use your spouse’s credit card and may not hold one of your own. In emergencies, this can prove costly.
It’s always better to have your own credit card and keep a good credit history. Acquiring a credit card for the first time is difficult as a lender finds it difficult to judge a person and trust him without a credit history.
There are a few ways you can start building a credit history by using the easily available sources, such as a bank or departmental stores or a gas station.
If you have a bank account and have a good standing in the bank, it can help the lender to judge whether you are a credit risk or not. So, your account history in the bank is very important in securing a credit card or loan for the first time.
A departmental store card can also help you establish a good credit history. It is easy to get a department card as the store benefits from your purchases. Here, you have to be on guard and not be impulsive in buying so that you are not able to pay them on time. Also remember to report to the credit bureaus once your card is activated. By paying on time and without default, you can maintain a good credit history which in turn can get you different credit cards.
You can get credit with no credit history also by mortgaging your assets such as a house or a car. Here, you have to be careful to pay the credit on time or else you might lose your pledged property to the lender in order to compensate for the debt.
Sometimes, having a permanent residential address, especially your own can get you credit even if you are a first time credit seeker and have no credit history. Having a telephone in your name or having an electric bill or gas bill can also help in getting you credit for the first time. If you have a good employment history and you show that you have steady job too helps you in procuring a credit card.
Once you have a credit card, use it wisely and pay the credit on time and thus build a good credit history. Remember, timely payment and not going over your limit in transactions while using the credit card goes a long way in establishing a good credit history.