Even if you haven’t yet taken out a large loan, it’s likely that you will at some point in your life need to borrow a large sum of money; for example, when you need a mortgage to buy your first home. If you’ve been able to avoid using any form of credit up until that point then you may think you’re an ideal candidate for a loan because you don’t owe any money, but nothing could be further from the truth.
Money lenders are well versed in dealing with risk. After all, they have to accept that some of the people asking to borrow money may not be able or willing to pay it back. So, being able to gauge risk is a very important part of the lending process. In the eyes of money lenders, a loan applicant with no credit history is an unknown risk and it’s difficult to feel comfortable about lending large sums of money to someone with no recorded experience of borrowing money.
Although popular opinion might lead you to believe that borrowing through a credit card is bad, it can actually be very beneficial as they tend to be easier to be accepted for if you’ve little or no credit history. A good place to start looking for your first credit card is at your current bank. If you’ve held an account at the same bank for a long period then they should be in a good position to offer you a credit card even if you’ve no prior credit history. Another way to obtain a credit card is to apply with a company who cater for those with little or no credit history such as Credit Land.
As long as your spending is kept under control, you never miss a repayment and you pay at least your minimum repayment amount then making purchases using a credit card can be a great way to build up your credit history.