How To Earn Credit Points With No Credit History

A credit card has become an essential service nowadays. It has made modes of payments easy, but resulted in it’s information being asked everywhere. Well, the question is how to increase the credit card limit or credit score. But before talking about how to build credit score, we must be clear with what is a credit score and how it is calculated.

What is Credit Score?

Starting from the essential credit score is a three-digit numeric value, which ranges from 300 to 850, which is an outcome of our credit file i.e., our transaction history or our payment history. We consider this numeric value or range as a MAGIC NUMBER as it tells us our worth before applying for any loan or credit card and also alarms us in times of crisis i.e., when our credit score is meager, below three hundred / 300 or even zero / 0.

At the same time, this value won’t bother us if we do not want a credit card for our use from the bank. The range of credit score is named from very poor (300) to exceptional (850). Well, all these calculations are based on the models given by FICO and Vantage, where these two models are different in aspects but are quite similar in terms of ranges. Not to forget, our changing credit score fluctuates our ratings.

The Regulatory Model

The model given by FICO for the calculation of our credit score is the most widely accepted video with the usage of approximately 90%. This tells the accuracy of the model. Talking further, we come to know that the most influential factor that helps in detecting our credit score is our payment history. Our payments and our transactions play a significant role here.

Let us get a quick check on how FICO calculates its credit score.

1. They consider our past payment history as much as 35%.
2. 30% consideration is given to our utilization rate.
3. 15% consideration is given to the time for which we have has the credit.
4. 10% consideration is given to how much time do we open a new account.
5. And the rest 10% is considered for the credit mix.

We can say that our credit scores are the proxy of our credit reports. Credit reports are the record of our details, credit account details, and public records.

No Credit Loans

It is well said, “ To get the credit we must have credit,” well, this is partially true since, without credit, we cannot get a loan. But still, there are ones who are in the utmost need of credit cards like the college-going students, the ones who want to buy a car or home loan but do not find it possible because of low or zero credit score. But there is way from every door, and here the solution to this problem is to start with a SECURED CARD instead of a standard card.

Secure Credit Cards

Secure credit cards are the best way to build credit if we do not have any credit. Here it allows us to start from scratch. They help you to easily qualify for optimal credit score if it is even non–existent. The difference between a secured card and an unsecured card is that here you need to make a small security deposit of an amount that can be as low as $50, and this becomes your credit limit. So if we start from more amount to deposit as security, then it would become our credit limit.

We must remember that few points regarding our credit card.

1. Every activity of our card is monitored, so we must report accordingly.
2. We must make our payments on time for good records.
3. Always choose a card with low fees as, at times, a few cards take unnecessary amounts.
4. We must wait for at least six / 6 months.

And yes, we are all ready to go to make are credit score.

Other Options

Well, if someone doesn’t want to go for a secured card, then there is an alternative where the bank keeps an eye on the online transactions and payments that we make. It accordingly maintains our credit score and informs us at the time when they are sufficient enough to get a credit card with a good credit score.

Well, this takes a bit more time then the secured card at times. We know that some institutions that offer us with few credit building tools but they may charge a fee that would be monthly and for which we need to go to the bank and link our accounts to that institution for example phone bills can be paid through this technique and then it would eventually help us to increase our credit score.

Conclusion

Well, we are quite clear of how to have credit without having a credit history. Since getting the credit, we need some understanding of some essential tools that help us to build a good credit score.