Building Credit With No Credit
By: Bob Benson | Posted: 20th October 2006
One of the oddities of the credit system is that if you apply for a credit card and haven't had credit before, you not only will probably get turned down but your efforts will work against you in the form of a drop in your credit rating. Almost as if penalties are built into the process, getting a credit card can hurt you for the short run and lessen your chances of getting a loan in the long run. So, how do you get around this oddity? Simple! Just read on and we'll take a look at ways you can establish credit with no previous credit on the books.
Anytime you apply for credit and are turned down that works against you. However, if you have no credit history, then how can you establish credit in the first place?
Fortunately, before you apply for that Visa, Master Card, American Express, or Discover Card that you covet, you may want to give consideration to applying for a store card. That's right, cards through Sears, JC Penneys, Home Depot, Lowes, Macys, and others can be had fairly easily. In most cases you only need to show your driver's license and list your income. Because their application standards are very easy, most first time credit applicants get approved.
Once approved for your card you then should start using it. Make at least one purchase at the store per month and then pay off the bill in full when it arrives in your mail box. Pay it right away too as a late payment could wreck your chances of getting credit with one of the major cards later.
After at least six months, apply for one of the major credit cards as you should have enough of a credit history on hand to successfully apply and receive a card. Before applying obtain your free copy of your three credit reports from AnnualCreditReport.com to make certain that your store card is listed. If there is anything of a suspicious nature or an apparent error, then notify the credit reporting agency before applying for the new card.
You can also establish credit easily through opening a cell phone account, your own telephone account, or through the power company. Always pay your bills on time as that will increase the likelihood that you will be approved for your favored card later on.
Jeff is the owner of Homeowner Loans one of the Uk's leading secured loan quote providers. If you are searching for that low rate on a secured loan then visit our site today for a free no obligation quote.
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Tags: american express, credit rating, mail box, credit history, sears, home depot, getting a loan, credit reporting agency, visa master card, oddities, time credit, lowes, oddity, credit applicants