Quick Ways to Build Credit Scores When You Have No Credit

According to myFICO, a Fair Isaac Corporation (FICO) score is almost entirely based upon payment history, outstanding debt and length of credit history. Young people just entering the workforce typically have no credit history and therefore cannot be scored by a lender. Borrowers should start building their credit history by taking out small lines of credit or secured loans, charging purchases every month and making sure they make their payments on time. Consumers with a thin credit history should ask for credit line increases every six months and limit the balances on their cards.

Secured Card

Individuals without credit should ask their local bank if the institution offers secured credit cards. Secured credit cards are secured by amounts on deposit held as collateral. If the consumer stops making payments on his secured card, the bank can seize the funds from the collateral account to repay the debt. According to Wells Fargo, these credit cards have a $300 to $10,000 limit as of March 2011 and can act as a steppingstone to obtain an unsecured credit card.

Store Card

Store cards typically offer individuals with no credit history a small credit line of $200 or less. Retail stores may limit purchases with the card to their own store or allow the consumer to use the card to shop at other stores. Store cards typically have few eligibility requirements due to the low credit amount, making them ideal for people looking to build credit.

Secured Loan

According to Wells Fargo, consumers can receive a secured loan if they deposit money into a money market account. A certificate of deposit (CD) requires a depositor to place money into an account that cannot be removed without a penalty for a set rate of return. Consumers can typically borrow up to the maximum amount held in their CD and make monthly payments on the loan for the entire loan term or until they pay off the debt.

Co-signing

According to Experian, a borrower without credit can ask a co-signer to share the responsibility of a debt or credit line. Students who recently graduated college may ask an older friend or a parent with an excellent credit history to sign a loan agreement with them. Since the lender can collect from the co-signer if the borrower defaults, the lender will grant a loan or credit line to a consumer with no credit history as long as the co-signer has excellent credit. Payment history shows up on both the borrower's and the co-signer's credit report, allowing the borrower to build credit faster.