Three Things To Do Now To Start Building Your Credit

14 September 2016
 Categories: , Blog


If you are applying for a loan, there are a couple of common reasons your application may be rejected. Though having bad credit is a prevalent reason, another widespread issue is that the prospective borrower has no credit. When you fall into the latter category, there are a few steps you can take right now to start building your credit history. 

1. Apply for a Credit Card

One of the first steps to building a credit history is to start responsibly using credit. Before you can do so, you need to be approved for credit. 

A secured credit card is one option. You make a deposit to the card that provides the basis for your credit limit. Some cards limit the credit line to the deposit, while others may extend an amount of credit that is larger than the deposit. Depending on the card's terms, you might be able to convert the secured credit card to an unsecured card once you establish a positive payment history. Check the terms of prospective cards so you know exactly what you are applying for.

2. Consider Asking a Family Member to Add You as an Authorized User

If you have a close friend or family member with a strong credit history, you may be able to piggyback off his or her credit. Your friend or family member must request to add you as an authorized user to a credit card. Adding an authorized user does not require a formal application, so you cannot be denied. When the card is used and the payments are received on time, the consistent payment history and responsible usage is reported on your credit report.

It is important to note that becoming an authorized user does not make you responsible for the debt.

3. Establish a Stable Employment History

Some lenders are willing to lend to individuals with bad or no credit if they can prove that they have a stable employment history. If you know that you need to apply for a loan soon, try not to job hop or go through periods of unemployment. Requirements vary, but staying at the same job for at least a year can make you seem like a positive credit risk.

Don't feel as if you must turn down job opportunities; if the job is a step up or increases your income, the change is viewed favorably, especially when compared to an employment history riddled with gaps.

Having no credit can feel as frustrating as having bad credit. Fortunately, there are simple steps you can take to increase your chances of being approved for financing. By following these easy tips, you are on your way to transforming yourself into a positive credit risk. To learn more about credit and financing, visit a company like Markosian Auto