Credit score is the key to your borrowing costs. The more points you have, the better. FICO scores above 660 indicate good financial health. It means that you are eligible for the most beneficial credit card offers with a low interest rate and tempting rewards programs. If you have less than 350 points, it means that you have no credit history. The lack of financial experience is always associated with higher finance charge. Like people with bad credit, you may have a tough time when it comes to getting a credit card or a loan.
According to Fair Isaac Corporation, there are about 25 million Americans who have no credit. They can be divided into several groups. First off all, they are young adults and immigrants. College students are not included in this list because they can get student credit card offers despite their lack of financial experience. The reason is simple: they are likely to get high-earning jobs in the future and become loyal customers. Young people who don't go to college are not so perspective.
Immigrants may have no FICO score because credit history applies to only one country. The information is not shared even within the same credit bureau network. That's why new arrivals to the U.S. have to build their credit history all over again.
The elderly people and divorcees may also have no credit. Older retirees may have repaid their mortgage and lived on a cash-only basis for a long time, so their report doesn't contain any recent payments or new accounts. Divorcees or people whose spouse has died may be left with no credit if their mortgage, car loans and credit cards were in the other partner's name.
If you want to prove your financial responsibility and trustworthiness, start with examining your credit report. Make sure that you truly have no FICO points. You might be surprised to find that because of a cell phone account or a student loan, you actually do have some entries in your file. It maybe just a couple of payments, but it is better than nothing.
Make sure that your credit report doesn't contain any errors, inaccuracies or fraudulent charges. For example, you may find that there is an account that you didn't open.
The next step is to apply for a suitable credit card. You can't live on a cash-only basis if you want to build a high FICO score! You need to demonstrate a borrowing and payment activity in order to get your report updated.
Although most major issuers feel more comfortable dealing with customers with a solid FICO score, there are also banks that provide offers specially designed for people with no credit. Just browse through financial websites and pay attention to the sections called "credit cards for no credit". These plastics are designed on unsecured basis. They may come with attractive rewards programs, reasonable fees and low interest rates as opposed to bad deals. That will make the process of building credit easier and more pleasant. And hopefully by starting with such a card you can develop good financial habits that will ensure your successful future!
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