For many consumers, not having any credit history can be just as bad as having bad credit. If you have no credit history you may be in credit limbo, with potential creditors turning you down for credit because they do not have any way of knowing your level of credit risk.
Luckily, if you find yourself stuck between a "rock and a hard place" in regards to your credit, there are many things you can do to build a solid credit record. Many of these things are similar to what you could do if you had bad credit.
If you have lived in the same home for at least a year and held a job for the same period of time, you may qualify for small lines of credit with department stores and other businesses within your local community. Make sure these businesses report your account information with the three national credit bureaus or you will be wasting your time using their cards to build your credit.
The interest rates on many store cards may be higher than a typical credit card, so make sure to keep only a small balance on any of these cards you may have. It's often a good idea to avoid paying off your balance balance so you can build a repayment history for your fledgling credit report. As long as you do not max out your cards and make your required minimum monthly payments you'll be fine.
Another way to build credit is to take out a small loan from a local credit union or bank where you are a member. If you can avoid it, do not use the proceeds of the loan except to repay the debt. You will pay a small fee in interest but that's often a small price to pay for building your credit.
Once you've established a credit record and creditors can see you have no problems paying off your debt you may start receiving offers from major credit card companies. You could start getting all sorts of mail from Discover, Visa, MasterCard and even American Express.
Be careful about applying for too many lines of credit. Most lenders will check your credit history when you apply for credit and each inquiry is stated on your credit report for at least six months. Too many inquiries are a red flag to creditors that you may be financially unstable. Your best bet would be to apply for no more than one line of credit every six months.
If you are still being denied credit after applying with local businesses or you can not get a loan you may not meet minimum salary requirements some creditors may use to gauge your ability to repay your debts. If this happens you may be approved for credit if you can find a friend or relative with good credit to co-sign for a line of credit in your name. This could be a risky proposition for the co-signer, however, as they'll be stuck with the bill if you can not make your payments.
If you are a woman who is divorced or widowed and had all your credit accounts under your husband's name, you may find yourself without any real credit to call your own. This usually can be easily fixed. The Equal Credit Opportunity Act makes it law that creditors can be required to list both names attached to a credit account if you shared a joint account in your husband's name.
If you need to build your credit the most important thing to remember is to be patient. Building credit takes time and you have to begin somewhere. Why not get started now?