To be approved for many things in life, from renting an apartment to buying a car, you often need to have a good credit score. Unfortunately, having no credit history isn't the same as having a good score. You might think that never having borrowed money using a credit card or loan makes you look good. However, what most people who check your credit score want to see is that you have proof that you are able to pay back a debt. If you've never borrowed any money, you can't do that. But, you might be thinking, how do you build your credit if no one will give you any without a good credit score? Here's how you can improve your credit history.
Apply for a Credit Card
One of the first things many people do if they want to build their credit is apply for a credit card. Some cards will be difficult to be approved for if you don't have any credit history. However, some are designed to be a first credit card. These cards might come with high interest rates, although some will have a special offer of a low or even non-existent interest for the first few months. Secured cards ask you to put some money up front to make you less of a risk. GoBear allows you to compare a range of cards so you can find the right one. It's important to compare the different benefits and drawbacks of what's available.
Get a Credit-builder Loan
You can also find loans that are designed to help you build your credit. However, they aren't exactly like the kind of loan you would normally take out. In fact, it's a bit more like a savings plan. The money you borrow is usually held in an account until you have repaid it. This might seem strange and perhaps even sound pointless. But unlike when you save money on your own, the payments you make are reported to credit bureaus. This makes these loans ideal for building your credit, even if they're not really loans.
Have Someone to Back You Up
Another thing you can do is have a reliable person who can vouch for you. By getting someone to cosign for a credit card or loan, you basically have someone who is saying "I will pay if you don't." This is reassuring to lenders who will be able to approach your cosigner if you don't make your payments. However, if you want to stay on their good side, it's best that you try your best to repay your debts.
Use Your Credit Responsibly
Once you've secured some credit, making the right choices is the next step to building your credit score. Simply having the credit doesn't say much if you can't show that you can use it sensibly. Try not to spend too much using your credit, and make your repayments as soon as possible. Try to use your accounts for as long as you can and avoid opening too many new ones too.
Having no credit history doesn't mean you'll never be able to get any credit. With the right choices, you can soon build a good score.
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