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How To Build Credit From Scratch

Written by Jason Steele

It’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.

About the author

Jason Steele

Jason Steele is a freelance journalist specializing in credit cards and personal finance. His work has appeared in many of the top personal finance sites as well as mainstream outlets such as MSN Money, Yahoo Finance, and Business Insider.

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