What if You Don't Have Credit?

Experts say to have a credit score you need to have had credit for at least six months and have one of the accounts updated during that time. According to experts, people without credit are usually retirees who have not used credit in a long time and whose mortgage is paid; divorcees and older widows, if the mortgage, bills, and cards were in the husband's name; those who have had poor credit in the past; and those that choose to have no credit. Experts say those who don't have credit but can't afford to pay cash for major items (cars, washing machines, etc.) and convince a lender to take a chance on them for auto loans, cards, etc., tend to pay high interest rates.

Here are some ways you can build a credit history:

  • Open a checking and savings account.

  • If possible, take out a loan with a cosigner. This will appear on your credit report and can be positive if paid responsibly.

  • Getting a secured credit card is another way to establish credit. They require you to deposit money equal to the credit limit extended. Make sure the issuer reports your activity to the credit bureau, or the card won't help build your credit history.

  • Gasoline and department store cards tend to be easier to obtain than a major card.

  • Try to take out an installment loan to help create a good mix of credit.

  • The key to building credit is not overextending yourself with a lot of credit on your way to building it. Most of all, make sure that as you lay the foundation of your credit you do it responsibly so it is a favorable experience for you.

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