Building credit can be a tricky task. Most lenders will want to see that you have some experience with managing debt before extending credit to you. Unfortunately, if no evidence of your previous debt management experience is reflected on your credit report, you are considered a much higher lending risk. This can result in your credit or loan application being turned down. In the finance industry, individuals with no credit are as great a risk as those with bad credit. Any loan or credit card that reports to the credit bureaus can serve as a good foundation on which to build a credit history. If, however, you have no credit at all, there are several options available to you.

Apply for a Secured Credit Card

A secured card is a type of credit card that is frequently marketed to individuals with bad credit. Companies that offer secured credit cards often do not evaluate applicants’ credit scores at all. Secured credit cards function differently than the unsecured variety. With a secured card, you will be expected to make a deposit to the credit card company. The amount of your deposit will, in turn, dictate your spending limit. By making purchases and paying for those purchases as soon as you are billed, you can build credit.

Borrow Against Your Own Money

If you have a savings account, you can use it to build credit. Visit the bank where your savings account is held and explain to a loan officer that you would like to build credit, yet have no credit to build upon. Some banks will be willing to freeze your savings account and grant you a personal loan for the same amount. Your savings account serves as collateral to guarantee the loan should you fail to repay it. In this way, the bank can extend credit to you with little to no risk. You, in turn, build a credit profile.

Get a Co-signer

A co-signer is an individual with good credit who agrees to sign for a loan with you. Banks are more willing to grant a borrower with no credit a loan if he or she has a co-signer. By signing the paperwork, your co-signer is agreeing to be responsible for the loan should you default. The bank will then consider you less of a risk because it has a dependable consumer who is willing to assume responsibility for the loan should you fail to make the payments.

Take Advantage of Student Credit Card Offers

If you are currently a college student, you may find it relatively simple to be approved for an unsecured credit card with no credit history. Credit card companies often set up display booths or hand out flyers on college campuses in an attempt to procure more applicants. Even though many of the college students who apply for these credit cards have no credit, the tactic is still a smart business move. The credit card companies are banking on the fact that college students will keep their cards for years to come and remain loyal customers. If you want to build credit using an unsecured credit card, there truly is no better time to do so than when you are in college.

Building credit may seem challenging, but once you have an established credit profile, it is much easier to get approved for loans and credit cards in the future. This is because potential creditors can review your credit report and see how you manage the debt that you currently have. It is imperative that you meet your financial obligations and pay your debts in a timely manner. Doing so demonstrates to anyone viewing your credit file that you can be trusted and are a safe lending risk.