Building Your Credit

If you have no credit history, you will have to establish a record of your ability to repay small loans before you are likely to be approved for a larger sum of money. There are many ways to do this, such as:

• Applying for a small loan at the bank or credit union where you have a checking or savings account.
• Applying for a credit card at a local store, such as a department store. Though they typically have a lower credit limit and a higher annual percentage rate, they are often more willing to extend credit and have no annual fee.
• Making a large down payment on a purchase and negotiate payments for the balance. Lenders are more likely to extend credit if you make a larger down payment for an item. For example, if you are buying a used car for $5,000 and have enough cash, you might consider making a down payment of $1,000 to $3,000. Although the loan will be very small, it can prove you make your payments on time.
• Asking a friend or relative with good credit history to be co-sign for you. The co-signer promises to repay the loan if you don't. The loan will then be reported on both yours as well as the co-signer's credit history.
• Paying your bills on time.
• Getting letters from your landlord or utility companies confirming that you pay your bills on time.

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