No credit history or poor credit history can make it extremely difficult to apply for a mortgage or loan. This is because you are considered a high-risk profile. Although there are some lenders who might offer you a loan with no credit, it seems to be important to know how you can establish or rebuild your credit.
Get a Secured Credit Card
Unlike regular credit cards, you are required to make a deposit if you want to get approved for this type of card. Your credit limit depends on the amount of money deposited into your account.
As soon as you get the card, ensure to pay your bills on time and try not to use the maximum credit limit to keep the credit utilization ratio low. A lower ratio can help improve your credit score.
Apply for a Loan and Get a Co-Signer
You can build credit by asking a trusted friend or family member to co-sign a loan for you. However, keep in mind that failure to repay the loan can negatively affect your co-signer’s credit history. If you choose this alternative, ensure that you have the capacity to repay the loan fully and not miss any payment.
Contact Experian for an Experian Boost
Do you pay utility and subscription service payments on time? Consider getting the Experian Boost to let you include certain payments to your credit reports. Payment data you can add include telecom and video streaming services such as Netflix or Hulu. Punctuality in payments contributes a lot to your FICO score, so adding these payments may help your credit score. It’s easy to sign up for the service. Simply create an account, link your bank, select payments and get the updated score.
Become an Authorized Credit Card User
If you have a partner or a parent who owns a credit card, consider asking them to make you an authorized user. You can use this card, but the primary owner settles the bill. This can work so long as the primary user has an outstanding on-time payment record.
Credit Builder Loans
With this type of financing, you can borrow money, but the lender holds onto the funds until you make the final payment. The funds are only released after paying the full loan. If you pay on time, expect a positive payment history on your credit report.
Maintaining a Good Credit History
The only way to do this is by paying your bills on time. If you’re planning to rebuild your credit, ensure that you can repay any credit card debt or loan that you intend to acquire. Building good credit may take time, but it’s worth it as you are rewarded with better terms and interest rates when you apply for loans or mortgages.