Whether it’s a landlord reviewing your rental application or a bank thinking about giving you a loan, your credit history will stand at the center of many important decisions. If you haven’t taken the time to build your credit, it’s high time that you do so. Here are four reasons why.
Bad credit card deals
Qualifying for the best credit cards will be nearly impossible if you haven’t established your credit history. This means you’ll miss out on the best interest rates and rewards. In addition to saving you money and providing you with a wide range of perks, the advantages of good credit cards will encourage you to keep using your plastic, which will boost your credit score that much more if you continue making payments on time and in full.
For people with no credit history, secured credit cards are solid first-time credit cards and can help you improve your credit score. Once you’ve built out your credit history, chances are good you’ll qualify for an upgrade to an unsecured credit card.
Difficulty getting a loan
Whether it’s a car loan or a mortgage, lenders will be reluctant to extend credit your way if they have no insight into your credit history. As a result, you’ll either miss out on loans altogether or be offered loans with high interest rates. Over the lifespan of a 30-year mortgage, for example, a high interest rate could cost you tens of thousands of dollars.
Trouble renting an apartment
The rental market can be fiercely competitive, especially in booming cities like San Francisco. With so many applications to sort through, landlords want to find renters with the strongest credit scores, which suggests a certain level of financial trustworthiness. If you have no credit history, it’ll be hard for them to make a judgment call on your application, which could result in a higher security deposit or having to find a co-signer for your lease.
Expensive car insurance
Like landlords, car insurance companies like to evaluate the financial reliability of their potential customers. They want to know whether you’re going to end up costing them money. Car insurance companies determine this by using credit-based scores to help assess risk. Though this practice is prohibited in California, Hawaii and Massachusetts, the majority of Americans looking for car insurance will qualify for better rates if they have a strong credit history.
From becoming an authorized user on someone else’s credit card to using your secured card responsibly, there are several ways to build a credit history if you haven’t done so yet. The name of the game is remembering to pay your bills on time and in full and to monitor your credit score so that once it approaches 700, you can think about applying for an unsecured card.
The post 4 Ways Having No Credit History Can Hurt You appeared first on NerdWallet Credit Card Blog.
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