What Happens If I Never Established a Credit History?May 19, 2011 - 5:37 pm
As hard as it may seem to believe, there are some adults in the country that have never developed a credit history. Not having any history may initially seem like a positive thing but in reality, your lack of a solid credit foundation can do you much more harm than good.
As there is more attention being placed on a consumer’s financial history and score, now is the perfect time to get established and at the same time save money in your everyday life. A good score can also help you find more affordable car insurance and can even be a factor in getting your next job.
Why Credit Matters
People usually begin establishing credit as young adults. Getting a card, opening store accounts, or getting utilities or services started in their own name is the basic starting points for most people’s history. For those who have never had the need or desire to start such accounts in their own name, a credit profile may never have been started.
For adults that lack financial history, it certainly will become a problem at some point in life. These days many service providers and insurance companies require a good score before they will allow services to be established or insurance quotes to be generated. For those lacking a credit history, services may not available or a high fee for down payments will be required on many accounts. This can get quite expensive for the consumer.
Getting Foundations in Credit Started
One of the easiest ways to start building a solid credit foundation as well as a good credit score is to apply for a credit card. There are many credit card providers that cater to those consumers with limited credit histories.
A credit card can be utilized effectively to improve credit histories and build a credit score. Make certain you get a credit card through a provider that reports back to the major credit reporting agencies. Once you have the credit card, make small purchases throughout the month and then pay the balance in full before the billing cycle has ended.
Over the course of 6-12 months using your credit card responsibly, you can potentially solidify your credit history enough to ensure your approval for other traditional credit cards as well as your other financial needs including loans and other lines of credit.
Responsible Credit Use Rules
The key to using a credit card as a bridge to a better financial future is to always meet your repayment obligations and to never overextend your credit. Running up a credit card account is a great way to ensure you’ll destroy your credit before you could firmly establish it.
Charging your regular purchases and automating your monthly repayments in full will put you on the road to more a more stable credit history. Find a credit card designed for people with limited or no past credit histories and ensure its benefits will match your lifestyle and your other financial needs. As you work towards stronger credit, you’ll have many more financial options and other credit cards to choose from provided you use your first card responsibly.