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What If I Don't Have a Credit Score?

Lisett Comai-Legrand

Lisett Comai-Legrand About The Author

Aug 31, 2017 6:03:00 AM

Not having a credit score isn't necessarily a bad thing. We all have to start somewhere. Building credit history is important, especially as you begin to think about purchasing a car or a home. Here are three easy ways that you can begin to build your credit history when you have no credit score.

Apply for a Credit Card

Credit cards often get a bad rap. However, credit cards can definitely come in handy when you're renting a car or a hotel room.  They are also great for emergency expenses such as car repairs, or travel. 

When applying for a credit card, I suggest starting with a smaller limit, like $500.00 or $1,000.00. Begin charging purchases that you know that you can pay off at the end of each month, such as groceries or gas.  This way, you begin to build a good payment history.

About Savings Secured Credit Cards

If you have accumulated savings, you can apply for a savings secured credit card. This means that your financial institution will put a hold on your savings account for the amount of the credit line on the card. For example, if you have $1,000.00 in your savings account, and you apply for a $500.00 savings secured credit card, your financial institution will hold or "freeze" $500.00 of your savings. 

You can use the credit card and build your payment history. Savings secured credit cards give you piece of mind, in that you know that if for some reason you get into trouble with the card, the amount in your savings account will pay off the credit card loan. 

Apply for a Personal or Signature Loan

A personal loan or signature loan is an unsecured loan with a term. Terms range from 12 to 60 months, or 1 to 5 years. Personal loans are guaranteed by your signature.  If you do not have credit history, and you have accumulated savings for a larger purchase, consider applying for a personal loan for the amount of the purchase. This way, you can use the cash that you would have used from your savings to make the payments on the personal loan, creating credit history. 

Things to Remember
  • Start small. Applying for one credit card is plenty to begin with. Making regular payments on the card will help you establish a credit score.  It is not necessary to go out and get multiple credit cards. 
  • If you have accumulated savings, consider a savings secured credit card. 
  • Speak with someone at your financial institution to help guide you to the credit product that best suits you, your financial situation and most importantly, your budget.

Do you know what it will take to pay off your credit cards? 
Use our free calculator to find out.

Calculate Payoff

We do our best to provide helpful information but we cannot guarantee the accuracy or completeness of the information presented in the article, under no circumstance does the information provided constitute legal advice. You are responsible for independently verifying the information if you intend to use it in any way. Additionally, the content is not intended to be reflective of First Alliance Credit Union’s products or services, for accurate and complete details about our product and service information you must speak to an advisor at First Alliance Credit Union.