How to Establish a Credit History

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Our friends at NerdWallet, a personal finance website, share some steps to follow if you have little or no credit history.

No matter how financially responsible you are, if you don’t have credit cards or loans, you won’t have much of a credit history. That can lead to low credit scores, which can make it difficult to get a car, a house or even a job.

Millennials — who have the shortest credit histories and lowest average credit score of all age groups, according to a recent NerdWallet report on credit scores — are most likely to deal with these problems.

But there are steps you can take to establish a credit history now, even if you can’t get approved for your own credit card.

Inherit your parents’ good credit

If you have a parent with good credit, ask him or her to add you as an authorized user on a credit card. This lets you make charges to their credit account without being responsible for payments. Keep in mind, though, that if your parent overspends with the card or skips payments, it’ll hurt your credit score, too.

Find a co-signer

Ask a family member co-sign on your credit account. This means that you’ll share responsibility for making payments. Be sure your co-signer has good credit and can cover payments if you ever fall short.

Get credit for paying rent

By paying your landlord on time through an app such as RentTrack, or the ResidentCredit program run by TransUnion credit bureau, you can build up your credit history. The one catch is that your landlord must also sign up before you can pay through these apps.

Building your credit history takes time and effort, but having solid credit can open the door to loan options and affordable interest rates in the future.

 

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