According to Lending Tree, almost 45 million Americans have little or no credit history.
They have a lower chance of being granted a vehicle loan or an apartment because of this.
These major life decisions frequently call for a credit check.
If you have bad or no credit, you might need to put down a bigger security deposit, locate a guarantor, or look for an apartment that doesn't check your credit.
Additionally, buying a car can require a bigger down payment, a cosigner, or paying cash.
All of those choices might not be feasible for a new college graduate or they might be uncomfortable.
It is worthwhile to take the time to establish your credit right now if you are not in a rush to make a significant purchase or move out on your own.
Here are three methods for getting going:
Become an authorized user
As the training wheels of credit, authorized users are.
You'll learn the fundamentals of credit as well as be able to build your credit with someone else's assistance.
You will receive a credit card with your name on it in the mail once a parent, guardian, or other person you trust and who trusts you adds you as an authorized user.
For a few years, parents frequently decide to keep the card hidden before allowing their child to use it.
However, as soon as it is in your possession, you can use it for emergencies or as a means of establishing credit.
This is a fantastic alternative since you'll already have a credit history, which will improve your chances of getting approved when you're ready to apply for your own credit card.
I was made an authorized user on one of my parent's credit cards while I was a senior in high school.
As a sophomore in college, when the time came to apply for my first credit card, I already had a line of credit established and was approved right away.
My top piece of advice is to become an authorized user as soon as you can if someone is willing to help, based on my experience.
Apply for a starter credit card
Many introductory credit cards have minimal or no restrictions for credit history.
Student cards, secured cards, and cash-back reward cards are things I would advise.
The card that college students can get approved for most easily is a student credit card.
The Capital One Journey Student Rewards credit card comes highly recommended.
This card is a useful resource for accumulating prizes.
With this card, you may check your credit history, get unrestricted access to your credit score, and in just six months, you'll be automatically approved for a larger credit limit.
If your credit is less-than-perfect, you should next consider a secured credit card.
A cash deposit that will act as collateral for the account is the security for this card.
In the event that the cardholder is unable to make a payment, the issuer is thereby further protected.
And lastly, getting a cash-back credit card will let you get a portion of your spending money back, like a deal or coupon.
To keep your credit in good standing, you must use credit cards responsibly.
After you get your first card, 35% of your FICO score will be based on how you've paid your bills.
According to Lending Tree, if a credit card payment is more than 30 days past due, your credit score may decrease by as much as 180 points and may remain on your credit record for as long as seven years. This might make it much more difficult to be accepted for a home or vehicle loan.
I have been able to improve my credit after three years of making payments on time and managing my credit card balances.
Without paying a security deposit or needing a cosigner, getting accepted for a car loan and an apartment was a breeze.
Look into other options for establishing credit.
I am aware of how challenging trying to negotiate credit-building may be.
Some people rule out getting a credit card or adding themselves as authorized user on a parent's card.
Thankfully, there are other choices:
Take into account requesting a credit builder loan.
With no credit history, it is simple to qualify for these low-risk loans.
Additionally, Equifax, Experian, and TransUnion receive reports on each payment made with this loan.
Using purchase now, pay later point-of-sale installment loans can be a way to improve credit if you frequently shop online.
You have the option of making a purchase over four or more interest-free payments.
Although these services have advantages, a drawback is that if you miss a payment, you run the danger of being assessed a late fee.
Although I have used BNPL before, I like to wait until I have the funds to pay for any online purchases in full.
Finally, managing your recurring phone and utility payments with programs like Experian Boost can help you raise your FICO credit score.
You must provide proof of three months of payments made within the last six months in order to use this service.
In addition to raising your FICO score now, using this service will help you develop credit over time.
Additionally, once you've found your first apartment, you can use your rent payments to raise your credit score.
In conclusion
Having a low credit score can make it more difficult to get approved for an apartment or auto loan, even though you are not required to have one.
Recognize that credit is used for a variety of purposes in adulthood, so having a credit score in the good range will increase your chances of getting approved.
You'll be on the path to acquiring your next home or vehicle with prudent credit usage in no time.
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