How To Establish Credit

When you don’t have a credit history, it can be hard and stressful when trying to obtain a credit card or other types of loans. If you don’t have any credit, not many places are willing to accept you, yet how can you ever establish credit. If nobody is willing to give you any?

Understanding What Lenders Are Looking For

Since you have no credit and is looking to establish some for the first time. Lenders can’t look to your FICO score to determine whether to lend you money or not. In these situations the lender has to examine other factors that can help them determine if you are a credit risk or not.

• Bank accounts. You don’t need to have a credit score in order to open a checking account at your local bank. Opening a checking account will not require any credit. It also doesn’t get reported to the credit bureaus to establish any credit. Even so, your account history can be a vital component when lenders consider giving you a credit card or loan for the first time.
  
  
• Employment history. Another, factor important to lenders is your employment history. They want to know if you are able to hold a job or if there are periods of unemployment. Your ability to keep a steady job can improve the likelihood of getting approved for credit.
  
  
• Residence history. Lenders will also look to see how often you move and whether you rent or own. As with employment history, it pays to have a stable residence. Owning a home, even if just jointly with a spouse, carries some significance as well.
  
  
• Utilities in your name. Even without a credit history, it is possible to sign up for many utilities. Having an electric, gas, telephone, cable, or water service in your name can help. Just having your name on these accounts won’t establish a credit score, but it can be helpful for new borrowers.