How to build credit history
Send to Friend
Establishing Credit History
In the U.S. every person's credit history is linked to their social security number. Credit history reveals your patterns of taking loans or credit, paying them on time, how many times you made a late payment, and whether you defaulted on a loan.
If you have bad credit history or no credit history, not only may you not be able to get a loan, you may have problems getting an apartment, phone, job, credit cards, electricity, etc. Bad marks in your credit history usually last seven years.
Establishing credit history is like the chicken and egg problem. Lenders give money to people with good credit history and established credit. However, if no one gives you credit, how can you establish credit history?
Some places may not give you a credit card of any kind unless you have been in the U.S. for at least six months.
You may get credit card offers in the mail. That does not necessarily mean you are automatically approved. You still have to pass their eligibility criteria, and you can be denied.
Creditworthiness must be determined based on criteria related to your ability and willingness to repay debt. You can't be discriminated against based on your sex, race, religion, marital status, national origin, age, or dependence on income from public assistance.
If you are denied credit, the creditor must provide a written explanation of the reason or give directions on how to find said reason. You are entitled to receive one free credit report for each denial.
Don't apply for too many credit cards at once. Whenever there is an inquiry to the credit bureau about your credit history, your credit report will reflect it. These entries are either considered "hard" or "soft." "Hard" entries are those you initiated when you applied for credit. "Soft" entries are those that creditors initiated trying to market credit to you. If there are too many "hard" entries in your credit history, it will definitely affect your credit score and will bring it down further.
Open at least a checking account and possibly a savings
account. If you don't have a bank account and if you have no credit history, you have literally no credibility to lenders. After you open a bank account, don't overdraw your account or let any checks bounce.
Even though bank accounts are really not part of your credit history, lenders can look at them to see how well you manage your money.
Employment and Residence History
When you have no credit history, lenders have to look at other factors, such as your employment history and residence history. If you have a good job with steady pay, you're better off than if you have changed jobs often in the recent past. If you had any periods of unemployment, it can negatively impact your ability to get credit.
You can approach a local gas station to see if they will give you a gas card. You can also try applying at local stores like Target, Sears, JC Penny, Macy's, Kohl's, etc. These types of cards are relatively easier to get. Once you have some of these cards (don't get too many), pay off the balance completely every month.
Before getting one of these cards, find out whether or not they report to a credit bureau. Otherwise, there is no point in getting such credit if you're trying to establish credit history.
Once you have established good credit history and have proper credit cards, cancel all the store cards. They typically have high interest rates and most can be used only at the issuing store.
After you have built a bit of credit history with store cards, you can try applying at your bank. If they refuse to give you a credit card, you can request a secured credit card. With a secured card, you'll only receive a credit line equal to the amount of money you've paid to the bank. Therefore, if you don't pay it back, the bank has already collected the money from you in advance, thus they don't run the risk of defaulted payments.
Again, make sure that the secured card issuer reports to credit bureaus.
There may be an application fee and/or processing fee.Source: www.immihelp.com