Credit scoring, according to the Federal Trade Commission, is used by creditors to determine if they should or should not give you a loan. It is based on your credit history and experiences, but if you have little or no history, getting the necessary ratings for a loan, insurance and even employment may be difficult. Fortunately, there are ways to build and maintain a good credit history.
Get a Co-Signer
Obtaining a loan without any credit history is not only difficult, it is likely impossible to accomplish on your own. If you have a close family member or friend, however, it is possible to get a loan that will help you in building up the history that you need. A co-signer is a person that is willing to take responsibility if you are unable to pay for your bill. Because of that, it may prove difficult to get someone to sign for you, as that person runs the risk of damaging his credit rating or being stuck with a bill if you should default.
Become a Joint Account Holder
Piggybacking on the credit card account of someone else is also another option for building credit. As a joint account holder, the account holder's credit becomes a part of your own, for good and for bad. It is important to become a joint account holder with the right person with a good score.
Get a Secured Credit Card
With a secured credit card, you deposit a certain amount of money into an account. The amount of money that is deposited is the limit on your card. Provided payments are made in a timely manner, the secured account is upgraded to a nonsecured account within 1 to 2 years. When signing up, Smart Money recommends confirming that your transaction history will be reported to the three credit bureaus.
Apply for Department Store Credit Cards
Credit cards from retailers and even gas stations have the ability to help you build your credit history. Because these types of lenders are less strict than the major lenders and credit cards, the cards are easier to obtain.
Use Credit Cards Wisely
Being approved for a credit card or a loan isn't enough to have a major impact on your credit. Use your cards on a routine basis, making small purchases that you can easily pay off at the next billing cycle. In addition, refrain from applying for more than one or two cards, as too many cards will reflect poorly as you build up your history.
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