Paragon Blog

Your Credit Score: What if I have no credit?

Memphis, TN - January 27, 2016

Your credit rating and credit score affect your ability to qualify for the best rates on services, insurance and, especially, home loans. Personal credit ratings and scores have also become a qualifying gauge for employers, especially those who seek to place employees in a position of management or financial responsibility. 

On occasion, those seeking financing will not have enough credit history to obtain the loan they wish to secure. In this case, they can start establishing history by opening small lines of credit that report to all three major CRAs and make purchases that can be paid off easily.

If you have not yet established credit, you are not completely out of luck. An alternate option would be to obtain a secured credit card. A secured card may be an excellent way for a person with no credit to establish credit. This type of card works like a debit card and will required deposited funds for purchases - the main difference being that your credit history will be reported to the three credit bureaus. Do your research up front to ensure that they do so. Also be advised that not all banks or credit unions offer secured credit cards, and some cards may even charge application and other fees.

It is also wise to start saving money for the down payment on your home. The lender will look at your application more favorably when you are able to provide a down payment percentage. Bear in mind, there are certain loan programs available that permit a percentage of gift money (for example, from relatives) for down payment.

Learn about what affects your credit score in our blog post "The 5 Factors of Credit Scoring: What is a credit score and how does it work?"

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