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Having no credit history can be very troublesome. Credit card companies of any repute will not consider your applications. Those who offer you personal loans will charge exorbitant interest rates. Insurance companies will offer coverage at a very high premium. These days' even prospective employers are looking at the credit history of the candidate to check habits like expenses, consistency, stability etc. Applying for mortgage loans or renting properties could prove difficult without a proper credit score and a decent credit history. Here are some ways to ensure you start on the journey.
Student credit cards
The new card reforms have barred credit card companies from entering campuses or trying to attract students by giving out free goodies. But even then, being a student is the best situation to be if you want to start out with a credit card. It is a good idea too. Firstly, you will have some expenses as a student and fairly steady pocket money. So by charging those expenses on the card, you can build a good credit history without any risk. Secondly, you will need to get a guarantee signature to open an account and can always request your parents or guardian, especially if they have a very good credit score. Most importantly, it will ensure you have a good score by the time it matters, and you are a working professional who can afford to spend well.
Prepaid credit cards
If you have no credit history, you are faced with a tricky situation when it comes to online transactions and making online bill payments. There are a lot of deals available online which can be availed if you have a credit card. A good idea would be to get a prepaid credit card, which can be used in the same way as a normal credit card. There are retail stores, gas stations and grocery or departmental stores where you can buy prepaid credit cards. You buy cards for a specific amount and obviously cannot, exceed that amount. It is very useful when you don't want to overspend. However, you need to be careful about the types of fees imposed. You also need to buy the credit card from places which report to the credit bureau. That way you are making the prepaid credit cards count.
Secured credit cards
Secured credit cards are offered to those with no credit history or bad credit score. Such customers represent high risk, which is why lenders need a security deposit that will reduce the amount of risk involved. This results in a win-win situation because you gain valuable credit history by getting the credit card. You only need to pay the bill regularly otherwise the credit card company can claim it from your security deposit. Over a period of time if you are consistent with your payment, you can even move to the unsecured credit cards. Therefore, secured cards give a genuine opportunity for those with no credit history to improve their credit score.