Many college students and young adults have no credit whatsoever. Lenders want to see a credit history before lending money. But a credit history can’t be built until consumers have taken out a loan. So how can this cycle be broken?
For young adults trying to start their lives, credit is essential. A mortgage and auto loan are both given out based on credit history. Without a credit history, these essential loans are difficult to get. Moreover, with a poor credit history, the interest rate on these loans will be sky high.
Luckily, there are ways to build a credit history with no prior credit. Expect building your credit history to take at least six months. Freedom Debt Relief reviews your options in this post.
Secure Credit Card
A secured credit card is a great way to begin building your credit history. The secured credit card works just like a regular credit card. The difference is that you will need to put down a cash deposit equal to the credit card limit. This deposit is kept as collateral in case you fail to pay your bills. Many times, lenders will switch the card over to a regular unsecured card after six to twelve months of on-time payment.
Authorized User on Credit Card
Freedom Debt Relief reviews suggests another way to build your credit history is to become an authorized user on a credit card in good standing. A friend or family member with a credit card can add an authorized user as long as they are at least 15 years old. As soon as you become an authorized user, the entire history of that credit card is added to your credit report.
FICO factors this in, meaning your score could see a boost. An authorized user doesn’t even need a card, the addition alone could improve the score.
Student Credit Cards
Student credit cards were created for students with very little credit history. The card functions just as a normal credit card does. A student card does require some credit history. Usually being an authorized user on a credit card in good standing should be enough to get you a student credit card. Freedom Debt Relief reviews suggests that if you can’t get authorized on someone else’s card, you will have to opt for a secured credit card.
Freedom Debt Relief Reviews On-time Payments
Making on-time payments with your credit card is the key to a good credit score. FICO bases the largest chunk of your credit score—35 percent—on payment history. Once you have credit, make sure you are on top of paying it back every month. New users often simply forget to pay the bill. Whenever possible, set up automatic monthly payments to take away that risk.
Good credit could mean buying the home or car you always dreamed of. Freedom Debt Relief hopes this review helps you build a credit history.
September 29, 2017