What Is Limited Credit History?

The length of time you have used credit counts for 15 percent of your credit score, according to the Motley Fool. Creditors feel more comfortable lending to people who have experience handling a loan. Because everyone starts without a credit history -- considered a "limited" credit history -- your first loan or credit card will probably have a low limit and a high interest rate.

Identification

A person with a limited credit history may have no record of a loan on their credit report. Alternatively, not using much credit can also count as a limited history, according to Experian. Having, say, a single credit card with a $1,500 limit for a year or two would likely make a lender think you do not have enough history handling borrowed money if you wanted a large loan for a house. Lenders look at patterns of fiscal responsibility in your credit report as much as the score. Part of a good history is a paying back large loans or having a lot of credit available, but not needing it.

Time Frame

Any credit history shorter than six months does not even receive a credit score, according to MSN Money Central. The length of time it takes to build an excellent score, somewhere above 700, depends on if you pay your bills on time and the variety of your loans. Actually getting a credit card or loan to build history will take work. The 2009 credit crisis tightened lenders standards; creditors did not mind a limited credit history when when credit was cheap and plentiful during the early part of the decade, but that changed.

You may have to start with a secured card -- where the bank requires some collateral before issuing a credit line. Cosigning a loan with someone who has excellent history gives you the same positive items on your report. Usually, only close relatives and friends agree to cosign a loan.

Starting Your Credit History

You want to start building credit early if you'd like to own big ticket items like houses, because most people purchase property with credit, not cash. A long an excellent credit history can help with other aspects in the financial world, such as getting low interest rates, cars loans and even background checks for employment.

Wells Fargo suggests that consumers hoping to build a credit history consider a secured credit card. Secured credit cards require you put up collateral, but unlike a prepaid debit card, on-time payments are reported to the credit rating agencies. You could also send copies of canceled rent checks to creditors to prove your ability to handle monthly charges. Retail store cards are easier to acquire than bank cards, but the FICO score model gives retail cards less weight.

Instant Credit History

You can get a instant good credit history if you someone puts your name on a join account. The history on a joint account will become yours, but both parties are responsible for repayment in case of default which could end up hurting you score. Alternatively, you can build a credit history by finding someone to cosign on a loan. Simply being authorized to use a credit card account does not help build credit.