One integral part of adulthood is establishing and maintaining a good or excellent credit score. Having good credit can open the door to several opportunities, or shut the door on opportunities if you do not have good credit. However, here is the caveat, how are you supposed to establish credit if you don’t have a credit history? Nerdwallet.com brings us some great options:
Apply for a secured credit card – a secured card is backed by a cash deposit that you pay upfront; usually the same amount as your credit limit. You use the card as you would any typical credit card; purchase items, make a payment (on time, of course,) and incur interest if you do not pay your balance in full. The cash deposit you made upfront is used as collateral should you fail to make your payments. However, a secured card is not meant to be used forever; it is just a stepping-stone to an unsecured credit card.
Apply for a credit-builder loan – The sole purpose of this loan is to help people build credit. This loan works by holding the amount of money borrowed in a bank account until you have paid off the loan. Once you have paid off the loan the money will be released to you. The payments you have made will be reported to the credit bureaus and will establish credit.
Get a co-signer – having a co-signer with good credit can help your chance of getting an unsecured credit card or loan. However, your co-signer will be required to pay the amount owed if you do not pay.
Become an authorized user on someone else’s credit card – as an authorized user you have the same access to a credit card as the card holder and you will build your credit, but will not be legally obligated to pay for your charges.
Get credit for paying rent - there are rent-reporting services that will use your good payment history to help establish history of on time payments. Not every credit bureau will consider these payments, but some do.