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Research: No credit history to good FICO score in a short span - Credit-Land.com

Credit history is quite important, whether you are applying for a new credit card, a bank loan for personal reasons, insurance or even a job. Credit history is being seen as a measure of the trustworthiness of an individual based on which lenders make most of their decisions. Hence one cannot afford to ignore credit rating. It is important to build credit history. Here are some ways to do it.

Use student credit cards if you are still studying

If you are a student it is a great time to start building a credit history. This is because you will be supported either by your parents, guardians or through financial assistance in the form of federal loans. Whatever be the case, you will have a fixed amount of expenses and income too. By using student credit cards, you can start building a credit history from a very early stage. Besides, if you can bring a co-signor who could be one of your parents or your guardian, you could easily acquire a credit card. The added history will benefit you at a later stage of your life.

Prepaid cards available at gas stations and supermarkets

Prepaid cards have a few benefits of their own. Firstly, you can get rid of carrying cash everywhere you go and use prepaid cards the same way credit cards are used. Secondly, you can conduct online transactions and make use of online deals which you cannot take advantage of without a card. Lastly, with prepaid cards you don’t have to worry about exceeding your limit or missing your bill payment deadline, two scenarios where credit card companies levy penalties on the card holder. In return for all these benefits, you might have to pay an extra commission on prepaid cards and based on the percentage, you can choose the one that suits you. These prepaid cards are easily available at supermarkets and some gas stations, unlike the annoyingly long approval periods for credit cards. By buying prepaid cards from places which report to credit bureaus, you ensure that you are building a credit history.

Secured credit cards

Secured credit cards are those where you get the card in return for a security deposit you make in your account. The creditor can claim this amount, if you fail to pay the card bill on time. As long as you make consistent bill payments, you can continue to use the secured credit cards just like any other credit card. Secured credit cards offer two important benefits. Firstly you don’t need a good credit history to get them. Secondly since the risk for the lender is low, owing to the security deposit, the interest rates aren’t as high as in the case of credit cards given out to individuals with bad credit history. Secured credit cards will be helpful when you have a regular source of income and would want to quickly build a credit history. Going for unsecured, no credit-check credit cards could put you in jeopardy with their high penalties and interest rates.