How Do I Build Credit with No Credit?
Unfortunately, not yet having a credit history (or having bad credit) can make it difficult to get a credit card. Some ways around this are to apply for a secured card, get a co-signer or become an authorized user on someone else’s credit card.
Secured cards require a deposit of a few hundred dollars (minimum), and for some people, they just cannot spare the extra cash. There may not be someone who trusts you enough to be a co-signer or let you become an authorized user on their account.
Enter Self Lender. Self Lender has helped thousands of people in this situation to build credit from scratch so that lenders will see they are responsible with credit. Self Lender is based in Austin, Texas and is dedicated to assisting customers in building credit while saving money.
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So, How Does It Work?
Self Lender is a proven way to lend yourself money and demonstrate that you can be trusted to make consistent, on-time payments. You begin by investing a small amount of money each month for 12 months into a CD savings account. You get to choose the amount — the minimum is $525 total, with payments of $25 per month. There is an administration fee to sign up and set up the initial account (this amount varies based on the total amount you choose to invest).
Over the next year, you will continue to make monthly payments that go into your own CD savings account. After 12 months, you will have access to your money, plus interest. Meanwhile, all of those on-time payments to your own account were being reported to the three major credit bureaus (Equifax, Experian and Trans Union).
You are basically paying on a loan or installment account, yet it is your money to keep. All the while, you are receiving positive feedback on your credit report each month. Note: Your payment history is reported as an installment account to the credit bureaus by one of our banking partners.
Self Lender To The Rescue
Is This a Good Idea? What’s The Catch?
Using the Self Lender 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 authorized user on one of their accounts.
In addition to 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, you have to make the payments consistently and on time — but since it is your money and you will be paying yourself, there is added incentive to stay on track. You’ll be earning interest and accumulating a nice savings 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. (If you’re not sure of your current credit score, remember that you are entitled to a free credit report once per year from each of the three major bureaus.)
While Self Lender makes no guarantees that it will improve bad credit, making a series of on-time payments often can.
Using Self Lender 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.