If you don’t have a solid credit history (whether you’ve never had credit or you’re recovering from some previous mistakes) it’s hard to get someone to approve you for credit.
Here are some tactics to get on the right track.
Open a secured credit card
A secured credit card provides a low-risk way to obtain a credit card account. It’s the best option for those with no credit history or bad credit. Card issuers provide high-risk customers with secured credit cards because each card is protected by a cash deposit.
For example, if you’re approved for a card with a $500 credit limit, you need to pay your bank $500 in order to receive your card. Your deposit covers your balance if you ever default on the payment.
A secured card looks and acts just like a normal credit card. The credit card payment is due every billing cycle, just like an unsecured credit card. You can make minimum payments or submit a larger payment to reduce your total card balance (probably a better idea since secured cards typically have a higher interest rate.
Use a rent reporting service
If you’re a renter, your rent payments probably aren’t helping your credit score because most landlords don’t report payments to the bureaus. Rent reporting services like Rent Reporters or Rental Kharma send the bureaus records showing you’ve paid your rent. Read the fine print because your landlord might need to verify your payments.
Take out a credit builder loan
Think of a credit builder loan as the inverse of a regular loan. With a credit builder loan, you make payments on the loan, but they go into a bank account. After the loan is paid off, you get your money. Local credit unions or online banks often have this option for their clients.
Be sure to always make on-time payments as your payment history determines 35 percent of your credit score.
Consider a co-signer
A family member or friend who has good credit can choose to co-sign for you. A co-signer accepts responsibility for making payments if you fail to do so. Be careful, though. If you miss payments, you’ll take down the credit score of the person who helped you.
Become an authorized user
When someone adds you as an authorized user to their credit card, you’re allowed to use the account but are not responsible for any of the payments. Parents often add their children as authorized users to help them establish credit. This can help you build credit faster.