How to establish credit with no credit history

Your credit history has to do with how you’ve managed credit over time. But if you’ve never borrowed money or had a credit card, you might not have a credit history. And that might make it harder to access credit.

Learn more about what it means to have no credit history and what you can do to build credit. 

What you’ll learn:

• Having no credit history typically means you haven’t had credit accounts that are reported to credit bureaus. 

• Without a credit history, it can be challenging to get credit cards or other loans. 

• Some credit cards and loans are designed to help people establish a credit history.

• Building credit with a credit card takes time and responsible use. That includes paying monthly statements on time.

Having no credit history means that the major credit bureaus—Experian®, Equifax® and TransUnion®—have no information in their records about how you’ve managed credit. And if you don’t have credit history, you probably don’t have a credit report or credit scores either. People in this category are sometimes referred to as “credit invisible.”

Everyone’s financial situation is unique. But here are a few common reasons why you might have no credit history:

• You don’t have any credit accounts.

• You have credit accounts, but your activity isn’t being reported to the credit bureaus.

• Your credit account is too new.

Having no credit history might affect you in several ways:

• Credit cards and loans: Lenders generally use your credit history to decide whether they will lend you money. Without a history to help lenders determine your creditworthiness, you could be less likely to be approved for a credit card, a personal loan or a mortgage. 

• Housing: A landlord may require a particular credit score to rent their property. If you have no credit history or your scores are too low, they might deny your application. 

• Jobs: An employer may also require a credit check as part of a job application.

You might be able to get a traditional unsecured credit card with no credit history. But if you can’t, here are six other ways to build or establish credit:

A secured credit card is backed by a one-time, refundable security deposit, which acts as collateral. That collateral makes secured cards less dependent on credit history and can make them easier to be approved for. You can use a secured credit card like any other card. When you use it responsibly, by doing things like making payments on time, you may be able to start building good credit. And over time, you may be able to upgrade to a traditional credit card.

An authorized user is someone who’s added to an established credit card account. Becoming an authorized user on a trusted family member’s or friend’s account could benefit you both if the account is managed responsibly. But negative habits could have the opposite effect.

With a credit-builder loan, a lender sets up an account with a fixed amount of money. You make monthly payments to the lender, which are typically reported to the credit bureaus. Once the loan is paid off, you get access to the money in the account.

Retail store credit cards may have more lenient qualifications. But make sure your card activity will be reported to the credit bureaus. If it’s not reported, you won’t build credit. And keep in mind that retail cards may come with higher interest rates and lower credit limits than other credit cards.

Self-reporting isn’t something you can technically do on your own. It typically means using a third-party service to send information to the credit bureaus that isn’t already being reported. That could include payments for things like rent, cellphone bills or utility bills. If reported, consistently paying these bills on time could positively affect your credit. Before you decide to use a third-party reporting service, make sure you’re aware of any fees and other terms and conditions.

Student credit cards are a type of unsecured card that’s designed for college students with little to no credit history. Student cards may be easier to qualify for than other unsecured cards. And with responsible use, you can use them to establish a credit history. Some student cards even offer rewards. Keep in mind that you typically have to be a student at an accredited university, community college or other higher education institution to be eligible.

Here are a few tips you might consider if you’re trying to establish credit and build good financial habits:

• Make payments on time to help build a positive payment history.

• Keep your credit utilization low to show you can manage debt well.

• Create a budget to help you spend within your means. 

• Avoid applying for too many new credit accounts in a short period of time.

• Monitor your credit to help track your progress and spot errors that could affect your scores.

Having no credit history simply means that you haven’t had credit accounts reported to credit bureaus. But there are ways to establish your credit. And using credit responsibly over time can help you build good credit scores. 

If you’re new to credit or searching for your next credit card, Capital One can help: 

• See whether you’re pre-approved for credit cards without harming your credit scores. 

• If you’re looking to build your credit with responsible use, explore cards for people with fair credit. 

• Earn unlimited 1.5% cash back on every purchase, every day, with a cash back rewards card. 

• Monitor your credit report and score with CreditWise from Capital One. It’s free, and using it won’t hurt your credit.