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Without an established credit history, creditors are unable to assess your credit risk. Whether you’re an 18-year-old student or a 45-year-old divorcee, to establish credit with no credit history, you can do the following:

Get a secured credit card

A secured credit card works like a regular (unsecured) credit card except it requires a security deposit. For example, a $500 deposit gives you access to a $500 credit limit. Secured credit cards are offered by many banks and credit unions. Inquire with the bank/credit union you currently have a banking relationship with about their secured credit card offering.

Note: Watch out for secured credit cards with application fees, annual fees, and monthly service charges.

Get a department store card

Some retailers have easier approval terms. The limits tend to be small such as $100 but by using the store card and paying the balance in full each pay period you’re establishing a history of on-time payments.

Note: To create and maintain a good credit score, don’t buy more than you normally would with cash.

Get a secured personal loan

Adding a small personal loan can help you improve your score. This is due to creating a different mix of credit on your new credit file. Banks and credit unions may offer secured personal loans too. A secured personal loan requires a security deposit for the amount of the loan and monthly payments for the term of the loan.

Become an authorized user on credit card

If your parents, a spouse or partner have good credit, then this option is viable.  Although you’ll get the credit history of that particular card added to your credit file, you don’t actually need to get or use the credit card. However if they missed a payment or carry a balance from month-to-month, the negative aspects carry over to you too.

As an authorized user, you aren’t responsible for the payment of the debt unlike that of a cosigner or co-borrower on a credit card. If you’re an authorized user on a delinquent account (because the card owner missed a payment) you can request to have the authorized user account removed from your credit file through the credit bureau.

Note: Not all creditors report authorized users to the credit bureaus, so you’ll need to check with the card issuer.

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