Factors That Can Help First-Time Borrowers Establish Credit

It is one thing to have bad credit in today’s world. Bad credit can prevent people from making all kinds of purchases like homes, automobiles, and other big ticket items. But having no credit can be just as harmful and detrimental as having bad credit. Those who are trying to establish a credit history for the first time can often find themselves in a bit of a catch-22 type of situation. Most creditors will not  give you credit if you don’t already have a history established but you can’t establish a history if no one is willing to offer you credit.

For consumers who are looking to establish an initial credit history, there needs to be an awareness of what lenders are looking for from those looking to be extended credit. They are not able to check any FICO score since there isn’t one without a credit history so they will look at several other factors to make a determination about whether or not an individual is a credit risk.

Employment History

Lenders will take your employment history into consideration when there is no credit history to check. They are looking for things similar to what a prospective employer would look for when reviewing an applicant’s resume such as long periods of unemployment and a general ability to hold down a job. Approval for credit with no credit history can be largely determined by an applicant’s ability to maintain consistent employment.

Bank Account Records

Opening a personal checking or savings account at a local bank branch does not require a credit check and therefore does not have any connection to the credit bureaus and thus has no bearing on credit establishment. Nevertheless, maintaining a consistent balance over an extended period of time can be indicative of a low credit risk.

Utilities in the Applicant’s Name

Most utility companies will allow people to open an account without any credit or with bad credit. If you have telephone service, an electric or gas bill, or water or cable service in your name and have a history of consistently making payments on time, this can work in your favor by showing creditors that you have a certain level of financial responsibility. Having these types of accounts in your name in and of itself will not establish any credit score for you but it will absolutely help you in certain credit-seeking situations as a first-time borrower.

Essentials