What Can You Do if You Do Not Have Enough Credit History?

Having not enough credit history can cause rejections for credit just as if you were someone with poor credit. You can overcome an insufficient credit history, but you must use credit to do so. You probably have to start off at the bottom of the credit food-chain, but you may build enough credit within months to move up to premium accounts.

Identification

There is nothing you can do to counteract a limited credit history other than starting new accounts to build credit or using the ones you already have. If you open any new accounts, it may take six months before the bureaus have enough history on them to add them to your credit score calculation. You should have a few credit cards and at least one installment loan, such as a car loan, to have a good mix of credit.

Starting New Accounts

If you need to add new accounts to your credit history, start with the easiest ones to qualify for, because a hard inquiry in your credit history can take up to five points off of your credit rating, according to the Fair Isaac Corporation. A good first credit card is a secured account because it requires a security deposit on the limit, so lenders take on very little risk. You can also try department store and gas station credit cards.

Alternative Credit History

You can self-report recurring bills that do not appear on a traditional credit history, such as most utility bills, to alternative credit reporting bureaus. An alternative credit bureau charges you to verify a self-reported payment, but a creditor must consider an alternative payment history in the absence of a traditional credit history. Relying on an alternative credit bureau is risky because most lenders prefer and have more experience dealing with credit reports from the three major national credit bureaus.

Tip

Do not open up too many new accounts at once and keep balances low on the accounts you own. Lenders want to see accounts that have never been late on your credit report, so focus on paying promptly. You can piggyback on another person's credit by co-signing on their accounts -- allowing you to forgo the credit check -- but this makes you dependent on the primary borrower to pay his bill on time or else missed payments hit your credit rating too.