The content is accurate at the time of publication and is subject to change.

If you do not have any credit to your record, it is quite a difficult situation as lenders and credit card companies base their interest rates and discounts primarily on your creditworthiness which is determined by your credit score. Credit score can vary between 300† and 850†, although anything about 750† is considered to be very good. There are a few ways to build your credit history.

Since you cannot get a normal credit card or a loan, the first thing you can do is look for stores which give cards that you can do shopping with. Some of these cards are reported to the credit bureaus and those are the places where you can start building your credit history. Try to have your electric bills, phone bills etc. in your name, so that by paying them off regularly and on time you can enhance your credit score.

The next step would be to apply for a credit card. Generally the interest rate for low credit individuals will be high and the rewards and incentives very low. You will have to live with it at least for some time, by making all the due monthly payments on time consistently. This will build a good credit history. If you cannot get a credit card, go for the prepaid card or the secured card, where the company doesn't lose anything. By using them, you can build some more credit history before you can land yourself with a normal credit card. You can always go for a different card with lower interest rate once you develop a decent credit history. Similarly, you must also have a savings account or a checking account in your name. Longer the history of the account greater will be the credit score.

Some people take loans not out of financial need but for improving the credit score. Strange as it may seem, you can take house mortgage loans or car loans, and by being regular at paying your monthly interests you are establishing your record as a creditworthy individual. Credit history cannot be built overnight, but there are immense benefits of having a good credit history and a high credit score. The interest rates for your loans and house mortgages will be less, you can get a credit card with more incentives, you can apply for student loans with less interest rate and many more benefits.

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.