What Happens When You Have No Credit History?

by Evan

Credit CardsNot everyone understands the concept of credit. It sometimes feels unnatural to spend money that isn’t really yours. But having a good history with credit makes it a lot easier to do many important things in life—such a buy a house or car. If you haven’t started establishing your credit yet, you might be wondering what happens when you have no credit history.

Is It Possible to Rent an Apartment with No Credit?

If you’re out on your own, you need to have a place to live. But it’s a lot harder to get an apartment when you have no credit history. Fortunately, there are some things people without a credit history can do in order to get housing:

  • Look for individual landlords as opposed to management companies. Larger rental organizations are typically going to have less flexibility when looking at people’s finances. With a private owner, you’ll be able to talk to them one-on-one and explain your unique situation. You shouldn’t have any issues assuming you can prove income.
  • Provide a security deposit. Landlords will be a lot more willing to hand you keys if you can give them some money upfront. This lowers their risk if you end up not paying your bills for whatever reason. Make sure you get hard documentation of this, so you get your deposit back when you eventually leave. The downside is that most people don’t have a few months’ worth of rent available to hand over in a lump sum.
  • Look for roommates. Living with others is a great way to lower your overall housing costs. Not only will your rent be less, you can also split expenses on necessities such as utilities. Plus, finding a roommate with credit history will make it easier for you to get a lease.

Can You Buy a Car with No Credit?

Buying a car is another major purchase that’s an absolute necessity to many people. Whether you need it to get to work, or bring kids to school, a car can be a life-changing asset. But it’s more difficult to acquire a vehicle when you have no credit history. Just like getting an apartment, however, it’s possible to get no credit history car loans through companies like RoadLoans. Here’s what you need to consider:

  • First, you should try to find a lender that works with people who haven’t established credit. A lot of places won’t offer you anything, so you’ll probably want to shop around a bit. However, there are organizations out there that specialize in bad credit and no-credit car loans.
  • If you’re having trouble finding a loan from a lender that works within your automotive budget, it’s time to look for alternative options. One route is to find someone who will co-sign on the loan with you. This will ideally be a relative, or someone very close to you who knows your financial It’s also possible to borrow money from a family member or good friend. It’s important, however, that you don’t slack on paying back these loans. Otherwise you’re going to severely harm your relationship with that person.

How Can You Build Credit?

If you have no credit history, now’s the time to start building it. First, you should check your credit report to be absolutely sure that you don’t actually have a credit history. Sometimes people have credit without even realizing it.

Once you’ve determined your credit standing, credit cards are one of the first places you can look to start building up your credit. If you have a checking account, you’ll probably qualify to get a credit card through your bank. People without a bank account can often apply for store credit cards. It’s important to note that you want to pay off your entire balance each month in order to avoid accruing interest. People with no credit history sometimes use credit cards as “free money,” which ends up getting them into trouble. This will ultimately be bad for your credit and will put you into debt. Don’t increase your spending just because you have access to credit.

Getting loans and other essential things is more complicated when you don’t have a credit history. Luckily, there are ways for you to work with no credit, and also establish your credit once you feel comfortable with the concept.

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