If you don’t already have credit, the best way to get started may be something you hadn’t considered. We take a look at the best ways for you to establish credit for a beginner or build your credit to get that home of your dreams or even an automobile.
I’m a Student and I Have No Credit
You may want to consider a personal loan or even a credit card designed for students. If you need help finding the right program, you can even walk in to a local bank branch and get assistance.
If you have a parent or friend with well-established credit, you may want to ask if they can add you to the account. Just joining someone’s account and not even having the card in your pocket can give you credit. Just make sure the person you partner with is responsible.
Nowadays, you can even add your rent or utility payments to your Experian credit report. This is also a great idea for students and beginners that are just getting started.
Many young adults want to build a credit history but don’t have one yet. It’s a strange paradox, but you have to start somewhere.
How to Build Your Credit
Most of the large banks and credit card companies will give you credit cards with low credit limits to consumers building their credit. Some require an annual fee. But this may not be the worst option if you can’t get one with no annual fee.
You may even want to consider a secured loan with your personal property as collateral. Be careful though, this can be repossessed if you fall too far behind on your payments.
There is another kind of loan, called “credit builder” loans, where the amount you can borrow is held in a bank account while you make the required payments and released accordingly.
Like any loan, you will want to be sure the financier reports payment information to all three nationwide credit bureaus.
Being an Authorized User
Many people consider becoming an authorized user on a credit card. As an authorized user on someone else’s credit card account, you’ll receive a credit card in your name, linked to the primary account owner’s credit card account. This can be an instant boost.
You won’t even be required to make payments, but you will suffer negatively if the primary owner defaults.
Surely, you are aware that building good credit takes time, so don’t be impatient. Make sure to sign up with a daily credit monitoring service so you can monitor your progress. This is a great way to stay encouraged while you work.