There are two situations when an individual has to take steps to improve his credit
. When the individual has either earned a bad credit history or when the individual has still not made any monetary transactions and therefore has no credit history. Credit card reports are ascertained to people who take loans. It is a document that helps lenders to judge an individual's loan taking and repaying capacity.
Steps that will help in establishing a no credit history individual's credit history are:
1. Understand how credit scoring is done. The two most important factors that decide the credit score of a person are:
a. The loan amount taken by a person.
b. If the person repays his loan amounts in time.
c. The amount of the loan that is used by him.
On the basis of the above three main factors, the credit score of a debtor is ascertained. In case the individual is not a student and still earning financial independence and still to acquire a credit score, then such individuals are referred to as people with no credit history
2. Establish a savings and checking account. After an individual with no credit history has understood the ways in which the credit scores work, the next step is to establish a running checking or savings account in his name. It is natural that all lenders look at bank accounts as symbols of financial stability. In case of first timers, opening accounts in a well established bank helps in starting to establish a financial history.
Minors below the age of eighteen will have problem opening a savings account individually as well as getting a credit card
. They can start establishing their credit history by holding a joint account with any one of their elders.
3. No credit history individuals can also borrow a friend's good credit card score. This can be done by either being a joint credit card holder or by getting a co-signer for any loan.
A co-signer actually helps in qualifying for loans in case the individual does not have a credit history. While the loan shows up on the credit report of the first timer and, when paid off with responsibility, boosts the credit score of the individual. On the other hand if the loaner defaults in repayment then the cosigner too becomes a defaulter.
Individuals who have signed on to a person's credit card and have become a joint holder of credit cards will also need to be aware of the fact that a bad credit history of the joint card holder will also affect his credit scoring.
4. Individuals still in college have a better chance to establish their credit history
. The reason behind this is that loan establishments will get financially established. This situation might not arise when the individual gets a job as then the repayment of the loan becomes his sole responsibility.