It’s a common predicament in the United States: You can’t get a loan without credit history, but you need a loan to begin building your credit history. And you need credit history for just about anything these days, including renting a home and getting a job.
So, what can you do? We’ve put together ways you can begin building your credit history, as well as loan options for those whose credit history is a blank slate.
Ways to Begin Building Your Credit History
When you’re first beginning the process of building your credit history, it can be tempting to try and find every single way possible to start seeing that credit score to tick up. But take caution and don’t take out more credit than you can handle. This list includes ways to build your credit that include both loans and non-lending related options.
Go to College
Who knew that improving your education can also improve your credit score? That’s, of course, only if you take out student loans to pay for those classes and pay them on time. Student loans can be offered through the federal government at relatively low interest rates, and often stay owned by the government so you don’t have to go through the hassle of having ten different lenders who own your loan over the life of it. Plus, you’re getting your education to improve your job prospects and income over time. Many community colleges and local universities offer evening and online classes, so even the busiest of us can find time to get smarter.
Apply for a Secured Credit Card
When you need to begin building your credit, one popular route to take is to get a secured credit card. Simply put, secured credit cards are credit cards that are backed by funds you provide. Here’s how it works: You apply for the card just like you would a standard, unsecured credit card. Underwriting processes are performed, and the credit card company determines how much your secured credit line can be. It’s sometimes as little as $200 and as much as $1,000.
Basically, you give the credit card company money and they give you an equal amount of credit available on the credit card. Each month you pay on time, it begins to build your credit history and score. Better yet, pay off your balance each month and watch that score tick up. Most credit card companies offer the ability to transfer it to a standard credit card after a few months of on-time payments.
Just because you have the money to put on it doesn’t mean you’ll get approval for a secured credit card, though. Some companies have certain requirements, like having an active bank account. Just make sure that before you apply, you meet all minimum requirements.
Balance Variety with Amount of Accounts
It is often recommended you have a variety of accounts on your record. For example, someone with just a student loan wouldn’t be viewed as positive as someone with a student loan and a secured credit card. But beware: too many accounts and too much credit utilization can have a negative impact on your score. Equifax says that an excess of credit inquiries in a short period of time can bring your score down – so pace yourself as you consider new avenues of credit. Options include a car loan, department store credit cards, and secured lines of credit – all types of loans that offer opportunities for those with no credit history.
Keep Your Existing Accounts Open
A small but important aspect of building your credit history includes keeping active accounts, well, active. The age of your oldest account, whether or not you’ve used them recently – all this can help lengthen your credit history. Also, keeping accounts open helps to increase your credit utilization, which does have a pretty large impact on your score.
Pay Your Bills on Time
While utility payments, cell phone payments, and rent payments don’t get reported to credit bureaus, non-payment might. When you don’t pay bills, even after the company attempts to make restitution with you, they will send the bills to creditors and report it to the credit bureaus. It can take years for this kind of information to fall off your credit history.
Loans for Little to No Credit History
As you build your credit by other means, getting a loan with no credit history is possible! Check out these options for cash with little to no credit.
Online Payday Loans
Payday loans are just like they’re described – they are short-term loans that are paid back by your next paycheck. You don’t need a high credit score – or a long credit history to be approved for a payday loan. Find out if the lender performs a credit check and if it a soft or hard inquiry. That might impact your score while you’re trying to create credit history.
A major plus to getting a payday loans is that you can apply online any time anywhere. Upon approval, money is typically directly deposited into your bank account the next business day. At LendNation, you can get your money even faster with instant debit card funding. Money is typically transferred to your debit card in 30 minutes or less.
Do you have a friend or family member that is in good financial standing that may be willing to help you get a loan? They can co-sign for a personal loan that will be on both your credit history and theirs. Co-signing means that another person is willing to vouch for you to a bank, that if you are unable to pay the loan, they will be responsible for repayment. Lenders are willing to give loans to those with little credit history or a less-than-perfect credit score, because they know the good financial standing of the co-signer will better ensure they get paid back.
Asking a friend or family member to co-sign a loan for you can be a scary prospect. Only ask them if you are positive that you will pay back the loan no matter what. Consider ways to approach the friend or family member about co-signing the loan and do all the research about their liability beforehand.
Larger Loan Options
Payday loans aren’t your only option for a loan at LendNation. For some, the very small amounts allowed in a payday loan don’t appeal to them; they need more than a $1,000 loan. That’s where Installment Loans come in. LendNation offers installment loans that don’t require perfect credit – anywhere from $1,000 to $4,000 dollars in some states. Every state is different regarding installment loan lending rules, so make sure to check what your state allows. If you need more cash, LendNation also offers Title-backed Installment Loans, that use your car’s value to back, or secure, the loan.
Here’s the thing about building your credit history: History takes time. You want to ensure that your blank slate is filled up responsibly and with good financial choices rather than starting out by taking on more credit than you can handle and not paying your bills on time.
For those with no credit history looking for an online payday loan to help with sudden financial emergencies or to bridge the gap between paychecks, LendNation is your go-to lender! Ask about a title loan, installment loan or payday loan today.