If you are an individual without any credit history, you might be facing a lot of trouble getting loans from banks, insurance with low premiums and credit cards from reputable card issuers. Credit history is the sign of creditworthiness of an individual and your sole aim should be to build a good history
. Good credit history is developed through reasonable expenditure, low or no debt and consistent monthly payment of bills, whether it is credit card bills, phone, internet or water bills. Here are some tips for those who are starting out with no credit history.
Go for prepaid credit cards
Prepaid credit cards can be used in the same way as one would use normal credit cards. In the present scenario, where a large number of people prefer online shopping because of the deals available and the discounts, a card is an absolute necessity. If you have no credit history, it would be a good idea to purchase a prepaid credit card which is available in departmental stores, some gas stations and supermarkets. It is important to find out whether these venues report your credit history to the bureaus. In a few months’ time you will have some credit history to show on your profile. You must be careful not to go for prepaid credit cards which charge exorbitant processing fee and substantial commission. The advantage on the other hand is that you don’t have to be worried about late fee, overdraft fee or paying high interests.
No credit, credit cards
Credit card issuers are trying to lend to those customers who seem to be trustworthy and have a good record to show for it. There are some lenders though, who are taking this as an opportunity and lending to customers with no credit history. When the risk is high, the gains are high too and such lenders charge very high interest rates on the credit cards. However, for someone with no credit history, such high interest credit cards could prove useful to build a good credit history. There should be extreme caution though, to avoid any sort of late payments as the fees and the interests are very high and will add substantially to the card debt. A benefit with such credit card issuers is that there isn’t any credit check at all in some scenarios.
Instant approval credit cards
These cards like no credit, credit cards are offered to card holders with no credit history. They are called instant approval cards, because they are offered without a lot of delay in the approval process. The applicant can apply online with all the details and would get to know almost immediately whether or not the card is available for them. This is in contrast to the longer waiting period in case of the major card issuers’ approval process.
Secured credit cards
These cards eliminate the risk involved with customers without a credit history. Applicants are provided credit cards after depositing a requisite amount in their account. If the card holder fails to make the payment, card issuers can claim it from the deposit.