How Do I Build Credit with No Credit?
Having no credit history or a poor credit score can become major obstacles while applying for a credit card. Nevertheless, there are solutions available such as applying for a secured card, having a co-signer, or becoming an authorized user. Secured cards require a few hundred dollars deposit, which may become an issue for some. Furthermore, obtaining trust from co-signers or being added as an authorized user on someone else’s account becomes a challenge. Explore these options to obtain a credit card despite having no credit or poor credit.
Self. Can Help
Self provides you with a unique opportunity to lend yourself money and prove your trustworthiness by consistently making on-time payments. Here’s how it works: for example, invest a small monthly amount for 12 months in your own CD savings account. The minimum total investment is $525, with payments as low as $25 per month. There’s an administration fee to set up your initial account, which is based on your investment amount.
As you continue to make monthly payments into your CD savings account, you’re making payments to your own account for a loan or installment agreement. After 12 months, you’ll gain access to your money with accumulated interest. Additionally, they report your payment history to Equifax, Experian, and Trans Union – the three major credit bureaus..
So, while you’re building up your savings, you’re also building up your credit score. Plus, one of our banking partners reports to credit bureaus as an installment account, reinforcing your positive payment history. By utilizing Self , you’re investing in your own financial future while establishing a reputation for responsible borrowing.
Is a Self. a Good Idea?
Using the Self program is an excellent way to build credit. The plan assists you in creating a positive credit record without having to deposit a lot of money at one time (such as with a secured card) or impose upon a relative or friend to become a co-signer or make you an allowed user on one of their accounts.
Besides building positive credit, you’ll also collect interest from the money you save in the CD account. A strong payment history accounts for 35% of your total credit score — more than one-third of the total. Having a documented credit history at all comprises 15% of the credit score; so, using Self Lender can potentially assist you in improving 50% of what’s required to build a positive credit rating.
Of course, make the payments consistently and on time — but since it is your money and you will pay yourself, there is an added incentive to stay on track. You’ll be earning interest and accumulating a nice saving account that you can use for something special down the road — or reinvest to make even more money.
The Ideal Tool To Build Credit or Diversify Credit Mix
Yes, building credit takes time and effort. However, it’s well worth it in order to qualify for credit cards, loans and purchases, such as a car or a home. (Remember that you may receive a free credit report once a year from each of the three major bureaus, if you are unsure of your current credit score.)
While Self makes no guarantees that it will improve bad credit, making a series of on-time payments often can.
Using Self to build credit is a wonderful idea for those who have no credit at all and no other way to build it. However, it can also assist persons with good credit to diversify their credit mix in a positive, low-risk way.