Having no credit (or being a "credit ghost") can be just as problematic as having bad credit. Lenders look at your credit history in order to judge whether or not you will be a responsible borrower, and if your credit history is blank, they have nothing to go on. Sure, there are no scars on your record proving that you've mishandled your finances, but there's also no indication that you can be trusted to pay back a loan.
Limitations Caused by Having No Credit
Some people are credit ghosts by choice, while others have a small or nonexistent credit history because of certain circumstances. Those who choose not to use credit may be afraid of getting bogged down by debt. And circumstantial lack of credit is often the result of being young, being a spouse who works in the home, or being new to the country. Whatever the case may be, having no credit can inhibit your potential as a borrower.
- You may have trouble getting a credit card. Some people believe that using credit cards to make purchases is a dangerous habit, and it certainly can be. Overusing lines of credit can lead to insurmountable debt and a world of financial trouble. However, it may be wise to have at least one credit card to keep for emergencies. And responsible credit card use can build a healthy credit score.
- Buying a home will be difficult. Having a roof over your head is a basic human necessity, but purchasing a house represents a very big accomplishment. Getting approved for the kind of loan that is necessary for home buying typically requires a good credit history that will strongly suggest to the lender that you're ready to manage such a huge expense.
- Renting an apartment may be difficult. You may not realize that many potential landlords will check your credit before granting you tenant status. They probably don't know you personally, so this is the only way that they can gauge whether or not you will regularly pay your rent on time.
- Buying a car may be harder. At some point in your life, you will most likely realize that you need regular access to reliable transportation. Owning a vehicle will make it possible for you to get to your job, attend classes, or just run everyday errands around town. However, if you have no credit, how can auto loan providers be sure that you will make your car payments?
No Credit Solutions
Building good credit takes time and effort, but it is entirely possible, and you can start today. Applying for a secured credit card is a safe and relatively easy way to lose your credit ghost status. These lines of credit require a cash deposit, and whatever amount you put down will become your credit limit. Your timely payments should eventually make it possible to transition over to an unsecured card with a higher limit. And you can continue to grow your credit from there.
You could also sign up for a service that reports your rent payments to the credit bureaus, like our trusted partner that you can sign up for here. Having your rent payments reported gives you credit for an expense you're already paying every month.
And if you need a car, you may want to consider special financing that can be obtained through a qualified dealer. "Bad credit auto loans" are also for buyers with no credit who wish to establish a positive history. After being approved for one of these loans, you will be able to purchase your vehicle and grow your credit rating with every on-time payment that you make.
Auto Loan Experts at Your Service
Finding a dealer who is qualified to handle special finance may not be easy if you don't know where to look. However, if you apply for your loan through Auto Credit Express, we'll do the hard part for you. We'll connect you with a dealer who can help with your bad credit or no credit situation, and all you have to do is fill out one fast and secure online application to get started today.