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How Does Having No Credit History Affect You?

Adults all across the United States are well aware of the importance of their credit score. That pesky numerical score that the big financial bureaus assign you based on your payment history, credit lines, loan paybacks, and so much more.

A lot of factors go into how the big three financial bureaus determine your credit score, and of course, having a high credit score is something everyone should shoot for. If they want to be able to do things like obtain credit cards with higher limits, obtain loans, lease a vehicle, or even rent a house or apartment, then a good credit score is going to be one of the biggest factors that makes these things happen.

With all of these things being dependent on your credit score, you’re well aware that having a high credit score is going to help you a lot more than having a low one.

But what if you don’t have any credit history?

Who Might Have No Credit History?

Many people all around the country currently have no credit history. They may be fresh-faced young adults, straight out of high school. They could be an immigrant who is settling into the United States, not having yet built a credit score in the country.

Some people may think that having no credit history is roughly the same as having bad credit, but they’re two completely different things. Bad credit stems from taking out loans and not paying them back, defaulting on credit card payments, filing for bankruptcy, and more. Having no credit history at all simply means that a person has not had any credit activity that the major financial companies use to create your credit score.

If you have no credit history at all, then you’re really not in bad shape. Your credit score is a clean slate, and you can begin building it up with some work and financial responsibility. Your score is a reflection of how you handle your financial responsibilities, and showing that you actively paying off your balances and taking care of business shows lenders, credit card companies, automobile dealerships, and even landlords that you are a trustworthy consumer that pays your bills on time.

How Can You Begin to Build Your Score?

Building your score may seem like a daunting task depending on who you ask, but it is really not that complex. To build your credit score up, all you need to do is be responsible with your bills and pay them on time. You may think your options for building your credit with no history are slim, but there are several good options out there that you should consider.

A great way to begin building your credit score is to obtain a low-limit credit card or even a secured credit card. A secured credit card is a card that has a smaller spending limit, usually somewhere between $300 and $500, but it can be more depending on the company and how much money you put up against it. With secured cards, you put up some money of your own as a “secured” deposit, and your spending limit is usually the same amount as the deposit you put down.

You can then use your secured card in any store or online, just like you would with any other credit cards. You pay it off on time as you go, and the credit company reports the activity to the big financial bureaus, showing that you are making your payments on time. All of your payments will be reflected on your credit report, and your score will rise!

Many companies, such as Nova Credit, have pointed out several other great ways you could build your credit up, as well, such as:

  • If you rent, request that your monthly rent payments get reported to credit bureaus.
  • Finance a purchase, such as a smartphone! If you get a plan with a cellular carrier and lease a device, your monthly payments will be reported by the carrier.
  • Take out what’s called a “credit building” loan, which can be obtained from some banks and credit unions. Your monthly payments will be reported and reflected on your credit report.

There are so many ways you can begin to build your score up if you don’t have a credit history, and these are just a few of them. If you’re ready to start building your credit today, then consider some of these methods to get started.

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