What to do if no credit history is holding you back

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You probably know that having a bad credit or a red flag credit report will make it very difficult to borrow money when you need it. But what if your problem is not a bad credit report, but rather an absent one?

If you are new to the world of work, you may not yet have enough credit history to qualify for a credit score. And not having a credit history could be an instant shutdown for lenders because it sends the message that you’ve never had to deal with bills before and therefore aren’t established as a trustworthy borrower. .

Of course, people with no credit history tend to find themselves in this frustrating catch-22 situation – you don’t have credit, so you can’t qualify for a loan or a credit card, but you don’t. you cannot create credit without having a loan or timely credit. card payments to show. It is a difficult place to live. So if an absent credit history is holding you back, here’s what to do about it.

1. Open a secure credit card

With a regular credit card, you have a spending limit that you must meet based on factors such as your creditworthiness and income. With a secured credit card, you put down a deposit that serves as your personal spending limit. But then when you charge expenses to that card and pay them on time, that positive activity is recorded to help you build a credit history.

2. Be added as an authorized user to another credit card

Without a credit history, it is unlikely that you will be eligible to open a regular credit card. But if you have a parent, sibling, or someone else in your life who is willing to add you as an authorized user on a credit card, it could help you build your own credit history.

Whenever an activity is associated with this account, it will also be added to your credit report once you become an authorized user. This does mean, however, that you will need to make sure that the person adding you to their credit card is a responsible borrower who pays on time.

3. Make sure all your invoices are recorded

While your timeliness of paying a mortgage or credit card bill is recorded as part of your credit history, everyday bills are usually not tracked in the same way. A good way to establish a credit history is to make sure that these bills are accounted for. You can use a service like Experian Boost (which is free) to track your timely payments for bills like your utilities and cell phone so that you get credit to manage them responsibly.

Not having a credit history can create a frustrating situation. The good news, however, is that there are steps you can take to turn a missing credit report into a stronger one. And that, in turn, could be your ticket to getting a credit score so that you can start taking advantage of different borrowing opportunities.

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