Starting at Zero: What to Do if You Have No Credit

Credit Scores
 — 
5
 Min read
 — 
April 5, 2021

It can be hard to get a loan or a credit card when you have bad credit because potential lenders can see that you haven’t paid back borrowed money as agreed. Since lenders want to loan to people who have a history of paying back what they borrow on time, it can be almost as hard to get a loan or a credit card if you have no credit at all.

It might not seem fair to have a lack of credit history held against you since you haven’t actually done anything wrong if you’ve never borrowed money before. So, how do you start to build a credit history? Here’s what you need to know if you’re starting at zero: what to do if you have no credit.

Obtain a Secured Credit Card

One of the easiest ways to start to build a credit history is to obtain a secured credit card. This type of card is secured by money you’ve deposited, often in a small amount such as $500. The bank has nothing to lose on this type of card because if you don’t pay the bill, they can continue to hold your security deposit.

As you build a history of making payments on time on your secured card, the bank may refund your deposit and convert the card to an unsecured card. If you decide to start building a credit history by obtaining a secured credit card, make sure it’s being reported to the three main credit bureaus.

Become an Authorized User

If you have a close friend or family member who has good credit and is willing to help you get started, ask to become an authorized user on one of their accounts. You don’t actually need to have the ability to borrow against their credit line. The only thing you’re trying to do is to have an account that’s paid on time show up on your credit reports.

Get a Co-Signer for a Loan

Another option is to ask a friend or family member to co-sign for a loan with you. This is riskier for them than letting you become an authorized user because the co-signer’s credit is at risk if you don’t make payments on time. It can also impact their credit score because it will show on their credit report as additional debt. 

Apply for a Store Card

Retail stores sometimes make it easier for people to qualify for one of their cards than other types of credit cards. In many cases, these cards can only be used in that one store. While this can help you get started building a credit history, pay attention to fees and high-interest rates that you may be charged if you make a purchase on a store card.

What Happens Next?

Once you’ve been approved for credit, work on being responsible for the money that you’ve borrowed. Always pay your bills on time and keep an eye on your credit report to make sure there isn’t any inaccurate information being reported. Since as many as 2 out of 3 people have a mistake on their credit report, you may need someone to help you dispute any errors that you find. Dovly can make this process simple using an automated credit repair engine. Get in touch with Dovly and find out how we can help you.


Like the article? Spread the word