No Credit? Here’s a Way to Build Your Credit History From Scratch

A young man sits on a couch, and he holds his credit card and smart phone as he completes a transaction.
Eva-Katalin/Getty Images

It’s tough to have no credit.

When lenders or potential landlords, for example, go to the credit bureaus to review your credit history, they won’t find anything. That’ll affect your ability to get a loan or rent an apartment; at the very least, you might end up paying more.

If you’re one of the 45 million Americans the Consumer Financial Protection Bureau classifies as “credit invisible,” lenders might be less likely to do business with you. You might be faced with less attractive alternatives like payday lenders, pawn shops, check cashing or rent-to-own places. You could pay significantly more, depending on the interest rate charged.

Here’s a good way to build your credit history: Get yourself a secured credit card. One we like is the Citi Secured Mastercard. It’s designed to help people who have limited or no credit history.

Here’s how it works: If you’re approved for the card, you’ll put down a deposit between $200 and $2,500, and that amount will be your credit limit. You’ll be billed for your monthly account balance, and it reports your payments to credit bureaus so you can begin to establish a credit history.

You can avoid paying interest by paying off your balance every month. Citi can help you avoid late payments with auto pay, online bill pay and alerts; and you can even choose your own due date.

Here’s the best part about the Citi Secured Mastercard: There’s no annual fee.

Being “credit invisible” today doesn’t have to impact you long-term — it just means you need to show the credit bureaus what you’re capable of.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He has cycled through too many credit cards.