How to get credit when you have no credit history
Having no credit history can be a frustrating experience. Whether you just moved from overseas, are moving out of home, starting fresh after a divorce, or have paid cash most of your life, we can help you get on the credit ladder so you can live your life.
If you’re not sure what your credit history looks like, the first step is to see what’s on your file. You might be surprised!
Why does credit history matter?
In many countries, lenders decide based on what you have now: your income, your savings, your job, or your relationship with your bank. In the US, they care most about what you've done before.
The US credit system works on the assumption that how you've handled debt in the past is the best guess at how you'll handle it in the future. That's why lenders look at your past actions and not your present situation.
Here are a few things that don’t count toward your credit score:
- Your savings don't count. You could have plenty in the bank and still have no score. A credit report tracks borrowing, not wealth.
- Your income isn't on your report. Lenders may ask about it separately, but it doesn't build your history.
- Paying cash doesn't count. Being responsible with money isn't enough on its own. It has to be borrowed money, repaid, and reported.
- Your history from another country doesn't come with you. Even if you had a spotless record overseas, US credit bureaus usually start you from zero.
The only thing that counts is time, and that’s why the best time to start building is right now. It can feel backwards, since you need credit to get credit. The good news is, there are ways to get positive history onto your file, even when you’re starting from scratch.
What you build depends on what you need it for
Not every company reads your credit the same way. There are several credit scoring systems, and they don't count the same things.
- An apartment. Many landlords use VantageScore, a newer scoring system that can score you after one account and about a month.
- A credit card or a personal loan. Most lenders use an older system called FICO. FICO needs about six months of history, and it doesn't count rent.
- A mortgage. Most mortgage lenders often use older versions of FICO, and they want accounts that have been open for a while.
So the first thing we ask is what you're trying to get approved for, and by when.
How to build your history
The rule is simple: pay on time, every time, on accounts that report to the credit bureaus. The catch is that not every type of account reports.
Usually reports
- credit cards
- car loans
- student loans
- personal loans
- mortgages
Usually doesn't
- rent
- utilities
- phone bills
- streaming subscriptions
- debit cards
You can pay these diligently for years and the payments won't show up, unless you sign up for a service that reports them for you.
How we can help you build your history
- Reporting monthly Credit Pros payments. Your monthly payments can be reported to the bureaus as an installment loan, which is recognized by both newer and older scoring systems, including the ones used for mortgages.
Your rights while you build your credit
Free credit reports. Federal law gives you a free report from each of the three bureaus every year, and you can now get them free every week at AnnualCreditReport.com (opens in a new tab).
Fair treatment when you apply. It's against federal law (opens in a new tab) for a lender to discriminate against you because of your national origin, marital status, age, sex, race, color or religion, or because some of your income comes from public assistance.
The right to know why. If a lender turns you down, you have a right to the specific reasons (opens in a new tab). If the notice doesn't list them, you can ask within 60 days.
There are additional options available, but which ones apply to you will depend on your individual history. We'll review your history together to determine which options are most appropriate for your situation.
Where we start
We start by pulling your file and seeing what's on it. You might already have some accounts reporting, or you may have nothing. Then we work together to build a plan based on your goals.
Not sure what your credit history looks like?
We’ll show you exactly what’s on your file so you can figure out how and where to build.
This is a soft credit pull, so it won’t impact your score.