How to build credit is an important part of independent living and financial wellness. There are many ways you can assemble a reportable history, even if you have never had credit before or are brand new. Building credit requires legally having a bank account or personal loan in your name with documentation of income and identity. For those who still need access to that particular resource, there are plenty of ways on how to build credit without prior experience.
1. Get a Secured Credit Card
A secured credit card is one of the fastest ways to build credit without prior experience. Simply put, you deposit a limited amount into a savings account at your bank and then apply. The bank will issue you a Mastercard or Visa for your deposit amount that you can use for online purchases, in-store purchases and even cash advances. After making your last payment on time and in full, you will receive your security deposit.
2. Become an Authorized User
As an authorized user, you are not required to put down a deposit and have the opportunity to build your credit for the time you are listed on the account. If you become an authorized user on your parent’s or spouse’s account, you can build strong credit without any financial liability that may come with being a joint owner. If your mother plans to apply for a loan, consider asking her to add you as an authorized user while she builds her credit history.
3. Get Credit for the Bills You Pay
When working towards building credit without prior experience, it’s important to pay your bills on time and in full. You can use this as a great way to make your credit history. Suppose you already have a checking account and are familiar with the payment cycles. You can ask if there is an opportunity for you to become an authorized user of a family member’s bill-paying account.
4. Practice Good Credit Habits
A great way to start building your credit history normally is to have good credit habits. This does not necessarily mean you need a high credit score to build your credit, but it helps if you’re focused on creating a positive identity and keeping up with all your bills on time. Start a routine of weekly receipts, pay stubs and bank statements. Developing a habit of tracking your spending and payments keeps you accountable and helps build that positive relationship with the finance company.
5. Check Your Credit Scores and Reports
Once you have a positive credit history, it’s important to check your credit scores and reports regularly. The easiest way is to call the company that reports the information to find out when it was last updated. Once you receive your message, you can use this report to build credit without prior experience by setting goals based on your financial situation and taking control of your money.
Building credit without prior experience is a great first step in financial control. Keeping track of your economic history and spending habits is a great way to shape your future and avoid the struggles that can come with credit rating issues. Credit is a resource that can be used with caution and care to help start a healthy financial habit in the future.