As the saying goes, “Rome was not built in a day” the same applies to the fact credit history is not built in a day. It is indeed true that building credit takes time. Especially when you have just begun and have no prior credit records, there are still ways to get through this. If you try so, it might take a span of 7 to 8 months or maybe a year to build a credit history, depending on how well and often you manage your credit by the time you gain the potential to do so in a timely and consistent manner.
There will be no updates about you with the credit bureau if you had never borrowed before or never had a credit card or a loan. These circumstances are labeled as NH or NA. You will be marked either as NA or NH, which implies not available and no history, respectively.
This happens because the credit bureau will not remark on your payment history due to a lack of details. Some banks, financial institutions, and non-bank financial companies (NBFCs) may refuse to offer you unsecured credit in these circumstances.
The importance of a good credit score.
A good credit score is essential for a variety of reasons. Because it is your credit score that allows you to apply for extra credit, such as credit cards and loans, many non-banking financial companies (NBFCs) are willing to provide loans and credit cards to those with bad credit, but they will charge you a fee.
It is known that a credit score is an inevitable part of our loan requesting process. And a strong credit score is essential for obtaining a variety of credit cards and speedy loan approvals. However, you must adequately create a history to open the line of credit.
Let’s learn about the approaches for establishing a credit history if you’re new to this.
Fortunately, there are a few options for avoiding this block. Here are some pointers to assist you in starting building a solid credit history if you haven’t had any loan inquiries.
Start using secured credit cards.
You’ll need to create at least one credit account to begin developing credit. For which secured credit cards can be a great help. These cards are issued by banks and are an excellent way for a new borrower to establish credit. However, you should be aware of any costs that some banks may charge for the product. If you don’t want to use a secured credit card, you could visit a bank and ask for a credit card with a limited credit limit.
Pay dues promptly once you get credit cards or loans.
You can also progressively boost your credit limit by making sure you pay all of your payments on time. A secured credit card can be obtained with a predetermined deposit and aids in the development of good credit history if all fees are paid on time. Also, ensure that you don’t apply for too many credit cards or loan products in a short period. This may degrade your customer value and subsequently will impact your credit history.
Take out a loan
There could be no option better to start building credit than taking out a loan with no credit history. Many banks and NBFCs offer student or credit building loans with even no credit history. This is a credit-building loan. Most of the banks provide these cards and are mainly aimed towards credit building of their customers and completing your needs of fulfilling the expenses to be covered in your education (if you are a student ) or want to start building credit in general.
Ask someone to let you be a low-risk authorized user.
The money you borrow will be put into an account by the lender, and you will make payment on it until it is paid. The Best way to look at these loans is through credit unions and community banks. And if your co-signers have a solid credit history, your credit score will also improve, and you will be able to repay the personal loan in time.
Be an authorized co-user of some acquainted credit cardholder.
Getting approved for any loan without having a credit background can be pretty tricky and challenging but not difficult. Though you know someone with a solid credit history who is willing to make you an authorized user on their card, even if the principal cardholder is responsible for the payments, your borrowing can help establish your credit credentials. If you want to build a credit history, ensure that your card activity is reported to a credit agency by checking with the card issuer.
Sign-up for a store card
Even if you have no credit history, many businesses and brands will grant you their store credit card. You can responsibly utilize it, but only to the extent, you would if you were paying cash. At the end of the month, pay off your total bill and insist on your credit history being reported to the Credit Bureau by the department store. So, the next time you buy something from your favorite store, think about taking advantage of their credit card to assist you in creating credit. You need to make sure you have the cash in hand to pay the bill when it is generated, and you can start enjoying having a progressive credit history.
If you are someone who has never taken out any loan or applied for credit cards before and just getting started and is looking for thorough assistance with your credit card building process, then Buddy loan is the right place for you. It is the perfect guide to help you get a personal loan online and establish a credit history from the very beginning.
People Also Ask:
Why is maintaining a credit history so important?
Maintaining a credit history is important because many organizations verify your credit before agreeing to lend you money or offer you a credit card. They may be cautious if you don’t have one because it is simply a gauge of your loan repayment capacity.
How long does it take to build a strong credit?
It takes considerably more time to acquire a strong credit score. If you want to get and maintain a great credit score, keep working toward it by making timely payments of your credit card bills and other loans, etc. In the end, one should never forget the key to achieving and maintaining a good credit score is perseverance.
How can I track my credit history?
You can track your credit score/credit history anytime, free of charge, by visiting Buddy Loan’s Buddy Score page