If you’ve just entered the adult world, you’ve probably yet to learn the wily ways of credit. Credit is a very complicated yet incredibly important concept to understand and the funny thing about it is that most places won’t give you credit unless you have credit to show (sort of a catch 22). But there are still options for those who don’t have credit, and if you use your options responsibly and show you’re a responsible borrower, you’ll find doors open pretty fast for you in the future.
- Emergency Loan Providers – If you have no credit and find yourself in a bind, there are still options out there for you. Emergency and short-term loan providers such as Wonga.com are perfect for those who are in a tough spot financially and don’t have a whole lot of options because of their limited credit history. You can choose how long you need the money for (up to thirty days) and the amount you’re hoping to get. They process your application online and then deposit the funds in your account the following business day. If your car breaks down, your water heater goes out or some other calamity happens, at least know you’ve got options.
- High Interest Credit Cards – Don’t assume that just because you don’t have a credit history you don’t have options when it comes to credit cards. Your options are just more limited and you’ll probably find yourself paying a higher interest rate because the company is taking more of a risk on you. Search for a card that has an introductory rate that’s low or (in a perfect world) zero, and try to find something that doesn’t charge an annual fee. Finding these things isn’t impossible but it’s much harder when you have no credit history to prove what a good customer you’ll be.
- Unsecured Credit Cards – If you’re just searching for something to help you build your credit and not hoping to spend money right away, an unsecured credit card is a great option. Rather than giving you a loan which is essentially what a secured credit card is, you’ll place a certain amount of money in a savings account tied to your credit card. When you make purchases the funds come out of your savings account as if you were borrowing from yourself. This helps the banks see that you’re a responsible borrower and after a certain period of time (say six months or a year) you can speak to them about reevaluating your credit card and applying for something secure. If you pay off the balance each month you don’t have to worry about interest and it’s about the same as if you were spending your own money with the big exception that you’ll be earning major credit points by doing so.
There are a few other ways you can gain credit without the use of credit cards, and all of these are great ways to ensure you’re not only building a credit history but building a good one. Your credit will follow you for years so don’t hesitate to get started right away!
Gemma Davis is a freelance writer and personal finance blogger who enjoys her time clacking out posts on her noisy mechanical keyword and consuming heroic amounts of coffee.