Let’s get right to it – one of the most common questions by people with no credit is how to build credit.
The good news is that you don’t have to do anything elaborate to get started on the road to accessing the kind of buying power that will one day allow you to purchase a nice home for your family, or enjoy the multitude of other benefits that come with having a bona fide credit history. In fact, it’s really pretty simple, according to an article over at Bankrate.com that details five easy ways to enter the club of creditworthy consumers.
1. Become a joint account holder with someone else. This is a no-brainer, as long as you have someone with an existing, solid credit history willing to let you hop on board the credit train with them. Oftentimes, it’s another family member who’s willing to let you do this. While these arrangements can prove troublesome for helpful co-signers, particularly if the person looking to build their credit through the union is a poor steward of the account, they can work just fine if everyone is of the right temperament and has their heads screwed on right. Just remember that when it comes time for you to break out on your own, that cannot happen until you are able to qualify for an account in your own name, by yourself.
2. Make sure your rent history is being reported. A lot of folks who rent their apartments and homes pay to a landlord or management company that does not report the payments to a credit bureau. Ask if the entity to which you make payments reports to Experian RentBureau. If not, you can actually sign up with a rent payment service that works with RentBureau, and your payment history can be a part of your official credit file.
3. Secure a secured credit card. You’ve likely heard this before. A secured credit card works like just any other card – and reports to the credit bureaus just like any other card – except that you have to keep on deposit an amount equal to your approved credit line, to cover the bank’s risk. No worries though; after you have demonstrated responsible use of the card for a year, your deposit is returned to you, and the card becomes an unsecured, or “regular,” credit card.
4. Use a gas card. Gas cards are another good way to go, because they’re easy to obtain, and you have to buy gas all the time, anyway. Purchase your gas with the card, pay the balance at the end of each month, and now you’re on the way to building a good-looking credit file.
5. Take out a personal loan. This is a perfectly fine strategy noted by Bankrate, but unlike those previously mentioned, it can sometimes be challenging to get anything like a signature bank loan unless you already have some kind of credit working for you. However, it’s a great option once you have a little time in with a secured card, for example, particularly because personal loans represent a different type of credit line that can reflect favorably on your credit score.
By Robert G. Yetman, Jr. Editor At Large