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

Having no credit history is a very serious problem in this country. It can affect you in several ways if you do not take steps to solve the problem as soon as possible. A lot of different types of people can be stuck without a credit history. It could be because you just got out of high school and never had a bank account, it could be because you just arrived at the country from overseas and do not have a financial record in the country, and it could also be because you have been living below the poverty line on government handouts and need to start building a record from scratch.

First, you need to take the most basic step, open a bank account. A bank account will require your identification, it will require that you are at least 18 years of age if you do not have anyone to co-sign, and it will require a letter from your workplace or school if you do not have anyone to introduce you to the bank.

After opening a bank account, the next step that you need to take is to start making regular deposits and never go overdraft. After around six months you can apply for a credit card with the bank if you have a social security number. There are many credit cards that do not require a long duration bank account, but applying to all and sundry cards can affect your credit score, as each rejection will reduce the score. Apply only when you are sure of getting a credit card.

The next thing that you need to do after getting a credit card is to start making transactions on the card. Try making your regular day-to-day transactions on the credit card so that it increases the volume of transactions. But remember, if you do not pay back the amount due by the end of the grace period, your credit score will suffer and you will have to pay large interest on the money borrowed. If you continue purchasing and repay the amount by the end of the month, your credit score will improve and your credit limit will automatically be increased every year.

Aside from this, you can also increase your credit score by taking loans for cars or education. Even if you have the money to pay up front, you can start building your credit score for a rainy day by taking credit for these items. With such a good credit score, you are sure to get a very low interest rate on the loans that you take out. Hence, it will not make much of a difference if you were to pay it up front. Besides, you will get tax rebates if you go for loans on housing and education and even automobiles. You need to weigh in the pros and cons to find out whether the tax savings and good credit score are worth going for a loan.