In the present times, it is nearly impossible to take out a loan without a credit history. Your credit report shows your creditworthiness to your lenders; that is, whether or not you can manage your finances well. If you have a good credit report and score, then the lenders/creditors will offer you loans on suitable terms and conditions, otherwise your loan application may be denied or you'd have to pay high interest on it. So, it is very important you have a credit history. Here are some ways to establish credit from scratch.
1 Take out a secured credit card from any bank
You can obtain a secured credit card from a bank by depositing an amount, which will be your credit limit. You can use this card to purchase things and repay the outstanding dues right on time. This will help you to establish a good credit record and will also establish your creditworthiness to your lenders/creditors.
2 Opt for a card from any departmental store
Charge cards offered by departmental stores are relatively easier to obtain. You can use this card to buy items from that store and manage it responsibly. Do not miss out the payment dates as it will ruin your credit record even before you build it properly.
3 You can finance a store purchase and establish credit
During the holiday season, a number of stores offer a plan through which you can purchase items on credit without paying any interest for a definite period of time, which is usually of 3 months. Since this is a type of credit, you can use this opportunity to establish a good credit history if you can repay the amount on time. However, make sure you read the fine prints before signing this kind of deal.
4 Open a checking and a savings account
A checking and savings account can also help you establish a credit history even if they are not considered as âcredit'. You need to deposit and withdraw amounts from your account to show that you can manage your money quite responsibly. It will help you to obtain loans in future as these accounts will prove your financial stability. However, take care to not bounce any checks and it will hurt your financial image.
5 Get a person to co-sign your credit card
A credit card always help to build a credit history. But, when you're trying to take out a credit card for the first time, get a person with a good credit history to co-sign your credit card. By doing so, he/she takes the responsibility to repay the outstanding dues in case you default on the loan. So, when a person co-signs for you, make sure you make the payments on time and do not garnish the financial reputation of the person who has helped you to establish credit.
It is quite important that you check your credit reports from time to time so that you are well aware of the items and you can take necessary actions if there are mistakes in your credit reports. Always dispute the inaccurate negative items in your reports. You will be able to establish a good credit report if you pay your bills on time and monitor your credit reports regularly. In turn, this will help you to have a better financial future.