blocksIt’s one thing if you are trying to rebuild credit after you’ve missed payments, gone though foreclosure or even bankruptcy, but it’s an altogether different problem is you are new to credit. Being new to credit and having to build a credit history from scratch is a problem faced by young adults, recent immigrants, and those who have avoided credit throughout their lives. Consumers in this position do not having any negative information in their credit histories, but can still have a difficult time establishing a credit history without having any track record of repaying a loan.

Getting Started

Building a credit history can be difficult at first, but it’s a process that gets easier as your credit file grows. You will want to start by opening up credit accounts and carefully managing them. You can begin by opening up a simple credit card account designed for someone with a limited credit history. For example, there are simple credit cards that don’t offer many rewards or benefits several that are designed for those with a limited credit history, and there are credit cards offered specifically for students.

In addition, some who are new to credit find that they can be approved for a store charge card. Many retailers offer store charge cards for their customers to finance purchases, with very minimal requirements for approval. And while these cards have high interest rates, they typically have no annual fee.

One option that is safe bet is a secured card. A secured card works much like a standard credit card, but it requires the payment of a refundable security deposit before an account can be opened. But once open, a secured card works just like any other credit card. Cardholders must make a monthly payment and they can incur interest charges if they choose to carry a balance.

Finally, another tactic for building a credit history is to become an authorized user on a credit card account of someone who has an established credit history and a strong credit score. In most cases, the authorized user will benefit from the high credit score of the primary cardholder.

Making The Most of New Accounts

Once you have opened a new account, your highest priority should be making the most of this opportunity to build a strong credit history. To do this, you will want to use your credit accounts to make charges, but only in a minimal way. And the most vital part of your effort to build your credit history will be the timely payment of each account. It’s also a very good idea to avoid interest charges by paying each month’s statement balance in full.

Another good practice is to monitor your credit history and your credit score. Thankfully, many major credit card issuers now offer free monthly credit scores, sometimes to anyone, not just their customers. In addition, you can request a copy of your credit history from the three major consumer credit bureaus once a year using this site.

Moving to Excellent Credit

After your first accounts have been open for at least a year, you can start taking additional steps to raise your score. You can request higher credit limits from your existing accounts, and apply for new accounts that have more competitive rates and fees as well as expanded benefits.

It can be hard to create a high credit score when you have no credit history, but it’s incredibly valuable to have great credit. By carefully managing all of your existing accounts, avoiding high levels of debt and late payments, your credit score will rise faster than you might have thought.

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