If you’ve never had a credit card or loan, you haven’t established a credit history. When you decide to apply for credit, you may find that lenders see a lack of credit history as almost as risky as a borrower who has a poor credit history. Your next question may be “What are a few ways to establish credit?”
Secured Credit Cards
Probably the easiest way to get started establishing credit is by applying for a secured credit card. This type of credit card is secured by funds you deposit into a savings account, so there’s no risk to the lender. It usually has a low credit limit such as $500, and it gives you a chance to make small purchases and pay them back as agreed. Once you’ve proven that you’ll pay bills when they’re due, your creditor may change this account into an unsecured credit card.
Student Credit Cards
Are you a college student? Many banks and credit unions offer credit cards that are aimed at student borrowers trying to establish credit. This type of card may have perks such as rewards for good grades.
Retail Store Credit Cards
Retail stores are often willing to extend credit to people who haven’t established a credit history. If you decide to apply for one of these cards, pay attention to what you’re agreeing to. While it may not be difficult to be approved for this type of card, you may find that the interest rate is high, and there may be an annual fee.
Borrowing With a Cosigner
If you have a friend or family member with good credit that’s willing to cosign with you for a car loan or a personal loan, you’re more likely to get approved even without a previous credit history. Many people prefer not to cosign for a loan because they’re on the hook to make payments if you don’t pay as agreed.
Taking Care of Your Credit
From the very first time someone agrees to lend you money, it’s important to be proactive about taking care of your credit. Pay your bills on or before the due date and try to avoid using more than 30 percent of your available credit. As a consumer, you’re entitled to obtain a copy of your credit reports each year from AnnualCreditReport.com. This allows you to make sure that what’s showing on your credit reports is accurate.
Credit Report Accuracy
Since your credit report is used by potential lenders to evaluate your creditworthiness, it’s important that the information being reported is correct. It’s not uncommon to find errors on your credit report. Identity theft affects millions of people, and you could even find that someone has opened accounts in your name before you’ve even tried to establish credit.
You should file a dispute right away if you find any errors you find on your credit report. Dovly is an automated credit repair engine that can handle working with credit bureaus for you to get errors removed from your credit report. Let us help you track and fix your credit. Contact Dovly today.