(BPT) – Whether you just graduated or haven’t been able to start building credit, you should know a lack of credit history can create difficulties down the road. Without a credit score or solid credit history, you may be unable to borrow money to buy a car, or could have trouble getting an apartment or job. Your credit history is viewed by many as not just a summary of your creditworthiness, but also trustworthiness, which is why some employers and landlords check your credit history. Credit histories take time to build, and to some degree may indicate to others how good you are at managing your money.
To build and improve your credit history, here are important tips to follow.
1. Use credit — carefully
Some may think using no credit is the way to a better credit score, but the opposite is true. Using a credit card to make small purchases, then paying them off on time is the best way to build your credit score.
Your score will improve due to how long you hold credit accounts, and also by:
- Making on-time payments every month
- Using no more than 30% of your available credit
- Not having too many lenders checking your credit at the same time
- Not applying for multiple loans or credit cards at one time
2. Plan ahead to pay bills on time
Use calendar reminders to keep track of payment due dates each month. If money is tight, contact creditors ahead of the due date to let them know you’re having difficulties, and to ask about options like making a partial payment or changing the due date.
3. Apply for a standard personal loan or credit card
Begin building your credit history by applying for a personal loan or a credit card. Keep in mind: Not all lenders will approve you without a credit history. Instead of applying to a bunch of credit card companies at once, which can hurt your credit score, seek lenders like Oportun who specialize in making loans to people with limited or no credit history. For example, the Oportun® Visa® Credit Card relies on A.I. and alternative data to underwrite hardworking people, many of whom are outside the mainstream. Unlike other card products available to financially responsible people with limited or no traditional credit history, the Oportun card is unsecured and offers credit lines starting up to $1,000.
“Our card provides individuals with a limited credit score the opportunity to start building a positive credit history and start them on their journey to financial success,” said Gonzalo Palacios, Senior Vice President of Credit Cards, Oportun. “We are proud to say that our use of technology and A.I. is helping bridge the financial inclusion gap left by more traditional financial institutions.”
The Oportun Visa Credit Card:
- Requires no credit history or security deposit
- Is available to financially responsible, hardworking people typically denied the opportunity, including those without a credit score, Social Security number or U.S. I.D.
- Is accepted worldwide, with no foreign transaction fees
- Includes 24/7 online account management, with support in English and Spanish
- Offers easy payment options: online, mail, phone or cash
- Includes zero fraud liability for unauthorized purchases
By reporting repayment performance on its personal loans and credit card products to the major credit bureaus, the company has helped over 945,000 people begin establishing a credit history.
For more information and to apply, visit Oportun.com/credit-cards.
4. Become an authorized user
Another way to start establishing credit is to become an authorized user on someone else’s credit card account. You can do this by asking a friend or family member who has a good credit history to add your name to their account. This gives you the benefit of having that person’s credit payments included on your credit report. Being an authorized user is a great way to help build a positive credit history.
5. Check your credit score
By law, consumers are entitled to request a copy of their credit report by contacting any of the three major bureaus — Equifax, Experian and TransUnion. Checking your reports helps ensure that all the information is accurate, as well as showing you what factors may be impacting your score so you can make improvements.
Follow these tips consistently over time, and you’ll be able to build a solid credit history — and a better future.