No Credit History? Here Are 3 Ways To Build One

Credit Card HistoryIn today’s world, when it comes to money, we are judged by our creditworthiness. Whether it’s a mortgage for a home purchase, financing a car, or buying new furniture, lenders need to know if you have the ability to repay and if your current credit history spells bad risk to them.  But what if you have no credit history? Then you’d be much in the same pickle as I recently found myself.

As a new immigrant to the US, I along with my husband hit a roadblock when it came time to rent an apartment.  When the landlords ran a credit check with my name and SSN, nothing came up and for several landlords, it was a deal-breaker even though they saw that we had a healthy savings account. According to, cash is not always king.  Fortunately, my husband has a very good US-based credit score so as a result, we’re not homeless.

I know that I’m not the only one who has confronted the issue of being refused because of a lack of credit history.  You may be a college student, a newly arrived immigrant, or you just never worried about credit before, but at some point, you may want to consider these options in order to progressively build a positive credit rating.

If you have not checked your score before, or maybe not recently? Click Below


** No Credit Card Needed **

Secured Credit Card

You can start by visiting a bank or a credit union near you that offers secured credit cards. How this works is that the bank will require a cash deposit that is equal to the maximum line of credit.  So if you want a $1K credit card limit then you’ll deposit the amount of $1K.

The bank will hold the deposit for a minimum of one year.  During this period, they will monitor your payment trend to ensure that you respect the payment due date.  When you’ve made timely payments consistently for 12 – 18 months, the bank will convert the secured credit card into an unsecured card and return your deposit.

Once you set up a secured credit card, and once the bank reports your account to the credit bureaus, it quickly begins to impact your credit rating.  Each bank will likely have their own policy, but if you make over a certain number of late payments, it gives them the right to keep your deposit on hold for a longer period or cancel the secured credit card altogether.  Shop around to find a secured credit card with a low to no annual fee, and take into consideration the interest rates and any other associated fees.

Retailer Credit Card

Retailer credit cards are issued by stores such as Sears or Macy’s or your local gas station. They are generally much easier to obtain compared to an unsecured credit card.  There are a few downsides one being that retail credit cards don’t hold as much weight in the calculation of your credit score.

You also should choose a retailer who reports their customers’ accounts to the credit bureaus as some do not.  Finally, the interest rates can be steep – upwards of 30% annually!  I would strongly encourage you to never carry a balance month to month.  Don’t say that I didn’t warn you as I speak from past experience.  Once you have opened up one or two retail credit lines and have built up your credit score, after a year or more, you can apply for an unsecured credit card.

Secured Personal Loan

Your credit score is calculated based on a set of metrics which include:  the length of time you’ve been with an employer, the percentage of how much is owed in relation to a credit limit, timely payments, judgments, and accounts in collections and types of credit lines you hold.  It’s important to not only have credit cards as lenders like to see you that can repay other forms of credit such as bank loans, mortgages, and car financing.

A secured personal loan is similar to a secured credit card in that you will provide cash as the collateral for the loan.  You repay the secured loan in equal installments over a set period of time while paying interest to the lender.  The lender reports your payments to the credit bureaus and with timely payments, your credit score will rise.  Once the loan is repaid in full, you will receive the cash you put down as the deposit along with dividends if your lender is a credit union.

Credit unions generally offer this type of loan more readily as opposed to the major banks. For a secured loan you would ideally keep the term of the loan to a year or less in order to pay the least amount in interest.As always, you need to do the leg work and shop around for a secured loan that has a low-interest rate and favorable terms.

The underlying key point with all three options is that you must make your payments on time.  There is no faster way to destroy a credit rating that you’ve worked hard to build than being delinquent.  I always advocate using credit responsibly.  You don’t need five credit cards.  Instead find one or two that cater to your financial needs, with a manageable credit limit, and strive to pay your credit line statements in full each month.

If you have not checked your score before, or maybe not recently? Click Below


** No Credit Card Needed **</