Nearly one in every 10 US adults don’t have a credit history with any nationwide credit reporting agency. This includes young people who have just started their adult lives and people who favor cash transactions instead of credit. An established credit history is important to get any loan. Lenders check your credit report and credit score to determine whether you are eligible for the loan and what should be the amount and the interest rate. However, no credit payday loans and bad credit installment loans are exceptions.
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If you don’t have a credit score and your credit report is blank, here are some smart ways to start building credit from scratch:
- Get a Secured Credit Card
A secured credit card is the one that requires you to deposit a security amount which is used in case you are not able to pay the payment. Before applying for one, make sure that the credit card company reports your payments to all three major credit bureaus which helps in building your credit history. A secured credit card will also help you qualify for an unsecured credit card.
- Ask for Help from a Co-signer
A co-signer will help you in getting a loan if you don’t have a credit history. You can turn towards your spouses, family members, or close friends to become a co-signer if they have a good credit score. However, both you and the co-signer should understand that you both are legally bound to repay the loan.
- Become an Authorized User on a Credit Card
Ask your parents or a trusted person to add you on their credit card. As an authorized user, you can use the card and build your credit history. You are not legally bound to pay the charges but if the primary cardholder wants you to pay your share, make sure you do it. Missing scheduled payments will affect your credit score as well.
- Report Your On-time Rent Payments
If you are making on-time rent payments, you can use this information to build your credit history. Many landlords only report late rent payments to encourage tenants to pay early. Make sure your landlord is reporting your on-time rent payments to the credit bureaus. You can also take help of rent-reporting services to take advantage of on-time rent payments.
- Apply for No-Credit Check Payday Loans
If you are facing any financial emergency and not able to get a credit card or loan due to your credit history, remember there are many lenders who offer you no credit payday loans or bad credit installment loans without checking your credit history. Repaying payday loans on time will help in building a good credit score.
Establishing credit takes time, so use it responsibly for building a good credit score and a strong credit history.
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