Tips From Freedom Financial Network On Building Credit When You Have No Credit History

Tips From Freedom Financial Network On Building Credit When You Have No Credit History

What’s the best way to build a credit history when you are just starting out? This can seem like a chicken and egg problem. To get a loan or credit card, you need a credit history. But to build a credit history, you need to have made payments on financial products such as a loan or credit card.

In this article, Freedom Financial Network is going to share some information that could help you get past these problems and build up your credit history.

Secured Credit Cards

A secured credit card requires you to deposit a small amount (usually a few hundred dollars) with the issuing bank. Once the deposit is complete and the card is approved, you use the card just like a regular credit card. Although, these cards will have lower limits than that of a comparable credit card.

The lower limit is part of the secured card restriction. After some period of use, which might be 6 —12 months, your card can be converted into an unsecured card. The deposit will also be sent back to you once the card has been converted.

If the conversion to an unsecured card isn’t available after a few months of use, you might consider applying for an unsecured card. Check your credit score before applying for an unsecured card. Scores over 600 start getting approved, but Freedom Financial Network says that over 650 might open up more choices and better chances of approval.

Student Credit Cards

Universities will often have credit card companies in the student union or other gathering place on campus. These companies target students with credit cards designed for those who lack a credit history.

Freedom Financial Network points out that student credit cards are unsecured. While it can still be difficult to get a student credit card in the beginning, it isn’t as strict as getting a regular unsecured card.

If you have been making payments on a secured card, that will certainly help your chances of being approved for a student credit card. If the option is available, applying for a student credit card should be your first choice when it comes to unsecured cards.

Getting Ahead As An Authorized User

Owners of credit cards can add other people to the card. This is called an authorized user. This person can use the credit card just like the primary owner. Some credit card companies will allow categorizing charges by user so the primary card holder can see transactions by authorized user.

If your parents, siblings or a friend has a credit card and is willing to add you as an authorized user, you’ll be able to build credit by piggy backing off of their credit history.

Do keep in mind that you can negatively affect their credit. If you run up charges that neither you nor the primary card holder can pay, both of your credit profiles will be negatively affected.

Be sure to set money aside each month to pay on what you owe.

If you’ve gotten ahead of yourself and need help paying down credit card debt, Freedom Financial Network can put together a plan customized for your situation. To get started, visit them at freedomfinancialnetwork.com.