No Credit History? Here's How to Get Started.

If you are fresh out of school, you may be wondering what your future holds for you. Perhaps you are considering buying a car or renting an apartment. Continuing your education may be on your mind. Or, you would just like to have a credit card in case of an emergency. Without an established credit history, this can be hard to do.

You can take steps to establish credit. By carefully planning out your path to credit and dutifully paying your bills on time, it is possible to build a good credit history. Below we detail some steps you can take.

Open a Bank Account

If you don’t have a bank account, open one. Whether you go to a bank that is close to your home or you pick one of the many online banks, it is helpful to have a bank account. Not only does this keep your money safe, it will be much easier to make payments toward any debt that you have in the future.

If you’ve had your account for a while, check with the bank to see if you are eligible for a credit card. Many banks offer credit cards for account holders and may even offer a special card for students to help them build credit.

One thing to note, many bank accounts come with debit cards. Debit cards are merely a way for you to use the cash in your bank account. They do not help you to establish credit.

Get a Secured Credit Card

If you’ve applied for a credit card and were turned down due to a lack of credit history, you should look into a secured credit card. A secured credit card requires you to send in a deposit. Initially, the limit on your card may be the same, or slightly higher, than your deposit. As you make purchases, your limit goes down until you make a payment.

With any credit card, it is important that you make your payments on time. When you make timely payments, you will see your credit limit raised after a few months. Some cards may even refund your deposit at a later date.

Open a Store Card

Department stores often have their own credit cards. Some stores may have more lenient credit requirements, which can make it easier for you to get a credit card with little to no credit history.

If you are able to get a store card, be sure to pay your bill on time. Store cards can charge very high interest. Paying late will not only impact your credit history, but it will also cost you a pretty penny.

Make Student Loan Payments

If you are fresh out of college, you will need to start making your student loan payments. Making student loan payments timely can help to establish good credit. If you are unable to make your payments, be sure to communicate your loan provider to find out what options are available to you. If you make student loan payments late, it can damage your credit.

Find a Co-Signer

If a lack of credit history is preventing you from renting an apartment, consider getting a co-signer. A landlord may be more comfortable leasing an apartment to you if they know they have another party to go to in the event that you don’t pay. This approach can be especially helpful if the landlord regularly reports on-time payments to a credit agency. Just be sure to pay your monthly rent on time to avoid any problems with your co-signer.

Finance a Car

If you have been saving up to buy a car, consider financing it instead. After you make a few payments, pay down the entire debt. Making a few payments on time and then paying down the debt will help you to establish credit.

A word of caution here. Financing a car merely to establish credit can be a costly way to go if you aren’t able to pay this down quickly. Many times, you will have a higher interest rate because you don’t have established credit. Interest can add up quickly. And if you are just starting out, having a monthly car payment can be a financial burden if you don’t have an established job or source of income. Unless you are able to pay this down quickly, financing a car may not be the best way for you to go.

If you don’t have an established credit history, you can take steps to build one. Credit is built over time. Careful planning and timely payments go a long way.