You’ll likely have a thin file if you have little to no credit accounts on your credit report. If you have little or no history, lenders don’t have enough information to calculate a credit score. It may take about three to six months for activity to get reported on your account if you have no prior credit history.
To begin establishing credit, you can try one of the following methods:
- Secured Credit Card: The balance on this type of card is equivalent to the deposit you put down. This reduces risk for the card issuer since any late or missed payment is covered by your deposit. After about six to 12 months of good payment history, your issuer may convert you to an unsecured credit card and refund your deposit.
- Credit Builder Loan: Similar to a secured credit card, this is a loan that’s easier to get than a regular loan since it has significantly less risk. If approved, the money for the loan is deposited into a savings account that is normally inaccessible to you until the loan is paid off. Some credit builder loans even allow you to make a little bit of money by paying interest.
- Authorized User: With this method, someone grants you permission to use their card and all activity on that card will also reflect on your credit report. However, this can hurt your score if that person is not responsible with their payments. Becoming an authorized user is a great way to build your credit when you have limited options to apply for a card. If you choose to go this route, remember to ask someone you trust, like a good friend or a family member.
A good credit score comes down to following best practices and responsibly managing your money. Learning how to improve your credit score requires familiarity with how your credit works and how different things affect your credit.
If along the way you find a number of discrepancies on your credit report or have other things that need expedient action, you can contact a credit analyst at Level Up 700 to help you restore your credit and get you back on track. Our team understands the FCRA and is prepared to help you receive fair and accurate reporting from the credit bureaus.