It's essential to have good credit. Good credit can get you better deals on many things, but it is also necessary to help you buy a car, get into an apartment, and especially buy a home. Beyond having good credit, it's good to have any credit; having no credit is where some people fall short.
People with no credit can get loans to establish credit, but only some offer these kinds of loans. Most banks and credit unions prefer to work with people who already have credit. However, some online credit companies have products that may meet your needs.
Those who have no credit history usually fall into two categories. First, they are younger and have never developed a credit history. For example, they may have just graduated from college, gotten their first job, or have yet to consider getting credit because they buy things with cash.
The other group is people who once had credit, paid it off, and never reestablished credit. Then, your credit report will show no credit after a few years. This happens because you must be using credit reported to one of the three big credit bureaus.
Not all credit cards or loans report to the three major credit bureaus. Some people accept offers thinking they are credited when they are not. So, you should always ask if a credit card or loan reports to the credit bureau.
Failure to have a credit history can knock you out of many opportunities to buy more oversized items or save money. For example, even stores that sell higher-ticket items like appliances will look at your credit history to determine whether you can afford a new stove or refrigerator. Things like this may not be a luxury if your old one has failed and you require a replacement.
It can also prevent you from buying a car, a home, or an apartment. Some employers even check for credit before making a hiring decision. So developing good, solid, consistent credit is more important than you realize.
A few ways exist to build credit. The problem is finding a lender willing to take the risk. However, you can do a few things to help yourself seem more creditworthy.
Keep your job for a while. You will look more responsible the longer you are at a job. It does matter.
Start saving. You can use your savings for some of the options listed below, and it can also act as a cushion to make credit payments if you take out a loan and have a tough month. Plus, lenders also look at how much you save when judging your creditworthiness.
Pay off any debt you have. People can have debt that needs to be reported to the credit bureaus. Paying that off will give you disposable income to pay for a loan that will improve your credit status.
Here are a few options for how to build your credit when you have no credit.
Banks or credit unions you already do business with may be able to guide you in establishing credit. Some have low-interest credit cards with minimal limits that you can use. Some financial institutions have lower loan amounts of around $500 that you can apply for and repay to build credit.
One option with these financial institutions is to take out a small loan using your savings or retirement account as collateral. This works if you have a savings or retirement account at that bank.
You don't pull money from either of those; instead, take out a loan and repay it on time. You will develop a credit score as you repay the loan without using your savings or retirement cash.
The only problem with doing this is that most banks and credit unions only offer small loans under $500. So, that could inhibit you from getting one if you have a lower income.
Some credit card companies have secured cards to help you build credit. For example, you put a low amount, say $100, as a security deposit on the card and can then use up to that amount.
Companies can either mandate that you pay your minimum bill monthly and hold onto your deposit for a probationary period or use the security deposit toward payment, which is, in practice, more like a debit card.
The difference between these types of cards versus debit or prepaid cards is that they report to the credit bureaus, depending on the company. Therefore, you will need to research the company you are considering.
Also, secured credit cards charge interest, which can sometimes be higher than is beneficial to you and your financial goals. Therefore, consider the total cost of using a secured credit card before applying.
Many people with no credit history will get solicitations for pre-paid cards. Prepaid cards can be useful, but they are not credit cards and do not report to the major credit bureaus. Instead, they are considered debit cards.
Store credit cards were once easy to get, but they have stricter requirements now. However, they remain one of the more accessible credit-reporting products to get. Practically every store has a credit card, so you will need to research which one may offer easy repayments, low interest, and the best chances at approval.
A disadvantage of store credit cards is that they tend to have extremely high-interest rates. That can make paying them difficult, and you want to avoid getting trapped in debt.
Online loans have opened many opportunities for people who need credit. Of course, many are out there, but Simple Fast Loans can help you get the money you need regardless of your credit history.
Simple Fast Loans has installment loans ranging from $200 to $3,000. With this type of loan, you have the ability to pay back the loan amount in smaller monthly amounts.
The maximum amount depends on your individual information and your state. The advantage of Simple Fast Loans loans is that no collateral is required. That should relieve some stress.
You will need some things to apply, such as a state-issued driver's license or identification with a picture, your Social Security number, a valid, active checking account in your name, and proof of income, such as some recent pay stubs or your last tax return.
Be sure to have these things available when you apply.
One good aspect of applying with Simple Fast Loans is the convenient and easy application process. Applying is done online in the privacy and comfort of your home. A decision is made almost immediately, so you won't be wondering and worrying about it.
Those with questions can ask the Simple Fast Loans customer support staff their questions before or during the application process and receive answers quickly. Then, check out Simple Fast Loans for a loan product to serve your needs. It is an alternative that could help.