How to build credit - with no credit history

Written by Meg Kramig

Let us guess: When you were growing up, your parents put the “fear of debt” into you, didn’t they? They stopped you from opening credit cards, taking out loans, putting your name on any bills, etc.

In many ways, you are lucky. You managed to find a way to get through life (so far) without accumulating massive amounts of debt. Which is actually unlike most Americans. But it’s hard to feel lucky when you NEED financial help, and your credit score is nonexistent. And since nonexistent isn’t definable, that means your credit score is actually…bad.

Wait, nonexistent means my credit score is BAD??!

Well, not technically BAD per say. But if you try and get a loan without any definable credit history, you are going to have a bad time.

Basically, instead of the service your parents thought they were doing for you, they were doing you a disservice. (Mom – we love you, but sometimes…)

Don’t worry. It’s fixable. Let’s start with the basics...

Why does nonexistent credit = bad credit?

It’s because you don’t have any provable credit history. Which means lenders have no way of knowing that if they lend you money, you will pay it back. And let’s just say – they don’t like not knowing.

So what can you do?

Start with a credit card. But make it one from a credit union.

The advice is always to get a credit card, but we’re going to go a step further and recommend applying for a credit union credit card from a federal credit union.

Why? Because federal credit unions have this neat thing called a “rate cap.” It means that by law, they can’t give you a credit card with an interest rate higher than 18%. This is unlike banks, who can (and often do) exceed above and beyond that rate – and if you have no credit, that’s exactly what a bank WILL do.

What’s the difference between a bank and a credit union credit card beyond the rate cap? Not much. But all the differences that do exist only serve to benefit you.

If your credit history has been non-existent long enough, you may need another option.

Credit unions are better about working with those in financial need than banks on average, but even for them…sometimes your lack of credit history is not enough to get you a credit card. In that case, we recommend becoming an authorized user on a trusted friend or family member’s card until you can get your credit more established.  

OR get on a monthly utility bill, streaming service, or cell phone bill.

Don’t want to go the credit card route? Experian provides a free tool called Experian Boost. With it, you can get credit for bills like your phone, utilities, popular streaming services, etc. and raise your credit score by showing that you are accountable.

Whatever you choose, pay on time, every time.

Remember the options above only work if you pay them off on time every single month. Otherwise, your nonexistent credit score will exist…it’ll just be bad.

Find the right credit union credit card for you with MoveCU.

We’ll help you compare, find and apply for credit cards from credit unions around the nation in minutes.

About MoveCU Inc.

MoveCU is the nation’s first credit union loan marketplace. Now users can instantly find, compare, apply for, and get pre-approval online in minutes on loans from credit unions around the U.S. Using their intuitive industry-leading technology, MoveCU is giving America’s smallest financial institutions a bigger voice and breathing new life into the credit union movement. For more information, visit our homepage.