Credit Cards

Are you graduating from college with no credit history? Here’s how to build one

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Get ready to see your credit history grow stronger day by day.

Key points

  • In some cases, having no credit history can be just as bad as having an unfavorable one.
  • There are steps you can take to quickly build credit when you’re new to the business world, like opening a secured credit card and talking to the owner.

Your credit history is probably one of those things you don’t often think about until you need to. But without a credit history, he may not end up with a credit score attached to his name. And in many cases, having no credit score can be just as difficult as having bad credit.

If you don’t have a credit score, lenders won’t know how risky you are as a borrower. And they may be hesitant to give you a loan or credit card when you apply for one.

If you’re a recent college graduate, you may not have a credit history if you were never responsible for paying your own bills. If that’s the case, here are some steps you can take to build credit quickly.

1. Open a secured credit card

With a traditional credit card, you’re given a spending limit based on factors like your income and credit score, and if you pay your bills on time, your credit can improve. But you may not qualify for a regular credit card without a credit history. In that case, you’re not doomed, because you can get a secured credit card instead.

A secured credit card differs from a traditional one in that you put down a deposit that serves as your personal spending limit. Then, as you charge expenses to that card and pay your bills on time, that positive activity is added to your credit history. It’s an easy way to build up some credit, though you usually won’t get the benefits of a regular credit card, like reimbursement for your purchases.

2. Being added as an authorized user to a family member’s card

You may not want a secured credit card and may not qualify for a traditional credit card of your own. In that case, see if a family member is willing to add you to their existing account as an authorized user. What will happen then is that as that card is paid off in a timely manner, that positive activity will be associated with your credit history.

Of course, being added as an authorized user to someone else’s card doesn’t mean you should feel free to charge it (unless that’s the arrangement you come up with). In fact, it’s a good idea to set ground rules so that the person who adds you to their card doesn’t end up backing out, and so you don’t accidentally upset the person who is doing you a big favor.

3. Ask your landlord to report your rent

If you don’t have a credit history, you may have a hard time renting a house in the first place. But if you can, say, pay a few months’ rent in advance, then it’s worth signing up for a service like Rental Kharma, which allows your rent to be reported for credit purposes.

Typically, rent payments are not reported to the credit bureaus that track your credit history. But you can arrange for that to happen, and from there, if you pay your landlord on time every month, it should reflect positively on you.

Not having a credit history can be challenging, and if you’re fairly young, it’s a common problem. These moves could help you build credit quickly so you’re not financially strangled as you navigate life after college.

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