Credit is much like the much-debated chicken-and-the-egg scenario. You have to have good credit to get approved for credit cards and loans, but you can not get good credit without first obtaining a credit card or loan.
This leaves many people confused, frustrated, and not quite sure what to do next. Thankfully, there are many options for someone in this scenario. There are special no credit history cards, specifically designed for those who are starting from scratch or rebuilding damaged credit.
These are called "secure cards". They build credit just like a regular credit card, however, upon applying you submit a small deposit check. Usually your credit limit will be equal to the amount of your deposit check, which ensures you are a zero-risk borrower (since technically, you're borrowing your own money).
It does not matter if you filed bankruptcy yesterday. You will get approved for these cards – it's guaranteed! These truly are no credit history cards.
To make things even better, many banks are willing to "upgrade" your card after a period of time has gone by and you've built positive credit. Many individuals who start out with a mere $ 300 credit limit (after paying a $ 300 deposit) are shocked to see their lines shoot up to $ 600, $ 800 or even $ 1,200 or more! Once you've reached this point, you're free to apply for some "real" credit cards to further improve your score.
Another option is a secured bank loan, which works in much the same way. The bank takes a set amount of your money, and holds it as collateral against a loan for an equal amount. Of course, you pay a bit of interest on the loan, but other than that it's absolutely free.
A bank loan looks fantastic on your credit report, and there's no way they will deny you when you walk in the front door cash-in-hand. There is simply no possible downside for the bank. If you default on the loan, they just keep your money!
Before you get ahead of yourself though, do try applying for traditional credit cards. Not everyone has to specifically apply for a secured no-credit-history-card. No matter how bad your credit is, give it a shot first. Who knows, you might just get approved. Worst case scenario, your credit score will temporarily drop due to the application – but what difference does it make if you can not get approved for anything already?
Follow these tips, and you'll be on your way to a great credit score in no time flat!
However, these suggestions are just the beginning. To further improve your credit score, and ensure you know the secrets to building wealth wisely, it's worth considering the purchase or a reputable credit system or book.
Credit can be confusing, so make sure you know where to stand, or the big banks will take advantage of you. Remember, they do this for a living – you do not. Education is power, and educated consumers always come out ahead.