Ways to Build Credit History

The length of your credit history impacts your credit score and, in turn, your ability to get approval for low-interest loans and credit cards. This makes building a credit history early a crucial part of your future financial stability. Unfortunately, lenders and creditors are often hesitant to grant credit to individuals with no previous credit history. There are ways, however, for you to build credit even if you lack any current credit information.

Authorized User Account

A friend or family member with a credit card in good standing can add your name to the account as an authorized user. Your lack of a credit history does not affect your ability to become an authorized user. This is because the primary cardholder -- not you -- has responsibility for making the monthly payments. As an authorized user, you will receive your own credit card connected to the account, and the credit card company will report the account, along with the primary cardholder's payment history, to the credit bureaus. Provided the cardholder makes timely payments, becoming an authorized user lets you build a positive credit history.

Secured Credit Card

Companies typically market secured credit cards to high-risk individuals and those with a tarnished credit history. Consumers with no credit history, however, can also take advantage of these accounts. If approved for a secured credit card, you must make a deposit to the credit card company that will serve as your spending limit. While secured cards do not offer the best interest rates and often come with additional fees, as long as you make regular payments on your account and the company reports your account to the credit bureaus, a secured credit card serves as a viable method for building a credit history.

Student Credit Cards

If you are a college student, consider applying for an unsecured student credit card you see advertised on campus. Unlike secured credit cards, unsecured credit card companies do not require a deposit. According to MSN Money, these accounts are available to students who lack a credit history because card companies know parents often manage college students' debts. This makes extending unsecured credit to students a lower risk than to individuals not enrolled in school.

Co-signed Loans

Like credit cards, loans you apply for also appear on your credit report. While many lenders hesitate to loan money to individuals without a credit history, asking a loved one with good credit to co-sign your loan makes you a much lower lending risk. By co-signing, your loved one accepts responsibility for the payments should you fail to adhere to the agreement. Having a co-signer makes the loan a lower risk for the bank, but a high risk for the co-signer. Because your co-signer is responsible for paying off your debt should you default, it is crucial that you make timely payments to build a positive credit history and preserve the co-signer's good credit rating.