What to do if you have no credit history
Like consumers with bad credit, those individuals with no credit history may have a tough time when it comes to getting a credit card, a loan, or borrowing money in general. According to data from Fair Isaac Corp., about 20 to 25 million people in the U.S. have no credit. But who are they?
Those with no credit often fall into defined groups, primarily young people and immigrants. College students get student credit card offers right and left, because despite their lack of credit history, lenders view them as a decent risk since they are expected to have solid earning power after graduating.
But young people who don't go to college may not get credit card offers, potentially leaving them with little or no credit.
Meanwhile, immigrants may have no credit since credit histories don't follow them across international borders. As long as the U.S. is not in sync with other international credit systems, new arrivals to the U.S. are left with no credit here, regardless of whether they had credit in their home countries.
The elderly and divorcées may also find themselves with no credit. Older retirees may have paid off their mortgage and gone for years without using a credit card, meaning their credit history is lacking recent entries. Additionally, divorcées or those whose spouse has died may also be left without credit, if the mortgage, credit cards and bills were in the other partner's name.
Elsewhere, those with no credit may have simply made the decision to do without it. These individuals may have made the conscious decision to live their lives without credit. Finally, those with no credit may have formerly been consumers with bad credit who simply cannot gain access to credit now due to their past mistakes.
Regardless of what group someone belongs to, they can begin to build a credit history with a credit card designed especially for the credit-less or those who have bad credit.
As long as the card issuer updates the credit bureaus about the individual's responsible use of credit (such as making more than the minimum monthly payments and always paying on time), even an individual who once has no credit can build a solid credit history.
Published: May 18, 2007
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