What to Do if Having No Credit History Is Holding You Back

by Maurie Backman | Published on Aug. 28, 2021

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A smiling woman handing her credit card for payment while seated at an outdoor cafe table.

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Don't have an established credit history yet? Here's your game plan.

You're probably aware that having a poor credit score or a credit report loaded with red flags will make it very difficult to borrow money when you need to. But what if your issue isn't an unfavorable credit history, but rather, an absent one?

If you're new to the working world, you may not have enough of a credit history yet to qualify for a credit score. And not having a credit history could be an instant turnoff for lenders, because it sends the message that you've never had to manage any bills before and therefore aren't established as a trustworthy borrower.

Of course, people without a credit history tend to land in that frustrating catch-22 situation -- you have no credit so you can't qualify for a loan or credit card, but you can't build credit without having timely loan or credit card payments to show off. It's a tough spot to be in. So if an absent credit history is holding you back, here's what to do about it.

1. Open a secured credit card

With a regular credit card, you're given a spending limit to stick to based on factors like your creditworthiness and income. With a secured credit card, you put down a deposit that serves as your personal spending limit. But then, as you charge expenses on that card and pay them off on time, that positive activity gets recorded to help you establish a credit history.

2. Get added as an authorized user to another credit card

Without a credit history, you're unlikely to qualify to open a regular credit card. But if you have a parent, sibling, or another person in your life who's willing to add you as an authorized user on a credit card, it could help you establish a credit history of your own.

Each time there's activity associated with that account, it will get added to your credit record as well once you become an authorized user. What this means, though, is that you'll need to make sure the person who adds you to their credit card is a responsible borrower who pays on time.

3. Make sure all of your bills are recorded

While your timeliness in paying a mortgage or credit card bill will get recorded as part of your credit history, everyday bills aren't typically tracked the same way. A good way to establish a credit history is to make sure those bills do get counted. You can use a service like Experian Boost (which is free) to track your timely payments for bills like your utilities and cellphone so you get credit for managing them responsibly.

Not having a credit history can make for a frustrating situation. The good news, though, is that there are steps you can take to turn an absent credit file into one that's more robust. And that, in turn, could be your ticket to getting a credit score established so you can begin taking advantage of different borrowing opportunities.

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