Lack of Credit Can Deny You a New Credit Card

If you are in good financial standing and apply for a credit card only to get turned down due to a ‘lack of credit history’, it is important to understand there are things you can do to improve your status and get approved for the card you want.

What Am I Lacking?

While many individuals established a credit profile at a young age, not all consumers have a need for the resources that make up a strong history. There are still some people that prefer to live solely on a cash-based system who may only have a bank account and utilize only debt cards. Not everyone will have established a financial history right out of high school, especially college students still relying on mom and dad for financial support.

If you never had a credit card, a loan, a mortgage, or any type of credit line, you may not have a history established at all. You may also have established a history but the information contained on it will be too slight for lenders to make decisions in your favor. In other words, you essentially need credit to get credit. This can be a confusing situation for consumers who find themselves unable to get proper credit simply because they never needed it before.

How to Build a Stronger Credit Profile

In order to get approved for a credit card, you may need to up your credit profile. This can be done in several ways including:

Apply for a Secured Credit Card

Secured credit cards require an upfront cash deposit to the credit card provider. This cash deposit amount becomes the line of credit on the card. Secured cards are a good option for people with no credit or bad credit histories. Provided the card issuer reports monthly to the credit reporting bureau, your credit history can be established over time. This will allow for you to apply for a traditional credit card to improve your credit further.

Research Your Credit Card Options

In addition to a secured card, there are credit card providers that will offer credit card options for those with limited credit histories. Research the providers that cater to people without established credit histories. Credit limits may be small and interest rates may be higher than average but with successful account management you can open up your options for other types of credit cards.

Take Out a Loan

An auto loan or a small personal loan is a good way to improve your credit profile. Only apply for a loan if you have the ability to pay it back. A good place to start is with your bank where you already have established relationship. Make regular payments on time each month and the information will help boost your credit score and round out your credit history.

Order Your Credit Reports

It is important that you know where you stand once you start getting deeper into the world of credit. Too often fraudulent activity goes unnoticed until a consumer orders their credit history reports. If you are not reviewing your own credit profile, someone else’s activities may be harming the credit history you do have. Check for inaccurate, unauthorized information on your credit reports regularly.

Be On Time

Whatever type of credit you are applying for to improve your overall credit standing, make sure that you meet each one of your financial obligations in a timely manner to boost your credit score. How you pay your bills is just as important to your credit profile as what types of accounts there are on your report.

You can build your credit over time and eventually have the option to apply for any credit card you desire. Credit histories and scores are important not only for credit approval but in these times, many industries demand a good credit history for everything from new employment, to insurance rates, to housing rental approvals.