Whether you’re in the market for a mortgage loan, car loan, or personal loan, you need a credit history. But what if you don’t have a credit history? Or what if you haven’t used credit in a long time and need to re-establish credit?
This can be a tough situation to be in, because you need a credit history to get credit. But at the same time you can’t build a credit history unless you already have credit. However, there are certain ways to build credit even without a credit history.
If you’ve already have a credit history, congratulations! And learn how to raise your credit score to 850.
Before we go into details of the ways to build credit without a credit history, there is one thing you should avoid doing. Don’t keep applying for credit cards. When you have no credit history, you’re more likely going to be rejected by lenders. And every time you apply for another card, your credit score goes down.
One way to get the best mortgage rates is to compare mortgage rates online. LendingTree is a great place to start. They offer a great comparison platform to give you the best mortgage rates.
Related topics on ways to build credit:
6 Ways To Build Credit Without a Credit History
1. Open a Savings Accounts a Bank That Offers Credit Cards.
One of the best ways to build credit without a credit history is to start a savings or a checking account at a bank that offers credit cards. Once you’ve created it, maintain it in good standing by making regular deposit and getting interest on your savings. Later on that same bank can offer you a credit card.
2. Get a Steady Employment.
To establish good credit, make sure you’re employed for at least 2 years for the same employer. That indicates stability.
3. Pay your Bills on Time.
Paying your utility bills on time is one of the ways to build credit. Missing payments can lower your credit score.
4. Get a Secured Card.
Applying for a secured card is one of the best ways to re-establish credit, or trying to establish credit for the first time. Besides that, there is no real benefit to it. So how it works is that you have to provide the money up front to the institution providing you the card. And you’re basically use that money when you’re using the card.
This is a good way to establish credit, because any time you use the card, that activity is reported to the three main credit bureaus.
Click here to compare mortgage rates through LendingTree. It’s completely FREE.
5. Apply for a Department Store Card.
Apply for a department store card like Best Buy, JC Penney or Macy’s and repay your cards on time to build your credit record. These cards can only be used at that company’s store. The interest rates are usually high, but you’re more likely to get approved without a credit history.
6. Check Your Free Credit Report.
Once you have done all of the steps above, obtain a free credit report to make sure the information reported is accurate. If you notice any mistakes on your credit report, address them immediately.
Related topics on ways to build credit:
Click here to compare mortgage rates through LendingTree. It’s completely FREE.
Work with the Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you save 100k (whether you need it to pay off debt, to invest, to buy a house, or plan for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.