4 Ways to Establish or Rebuild Credit

In How to Build Good Credit, we discussed how a history of responsible credit behavior can make it easier to get a loan, a credit card or even a job. This can make it tough if you’re just starting out in life or if you’ve had some credit slip-ups in the past. If you aren’t able to get credit in the first place, how are you supposed to build a good credit history? It may take some time and effort, but there are ways to do it.

Below are four ways to get started. Be sure to ask your lender whether they report to a credit bureau. Focus on the ones that do report, especially when starting out or starting over.

  1. Secured credit – These products are specially designed to help you establish credit. To obtain secured credit, you deposit money in an account, and that deposit serves as collateral for your credit card. Now, you can borrow up to the amount you deposited and prove you can pay it back. If you don’t pay back what you borrowed, the credit card company will keep your deposit to cover your missed payment.
  2. Cosigner – If you have a parent or someone who trusts that you will pay your debt, you can ask them to cosign on the loan. As a cosigner, they’re obligated to pay your debt, but they won’t have to unless you stop paying first. Cosigners have to qualify for the loan on their own in order to qualify as a cosigner. Cosigners are common for first-time car buyers. Always make sure you can afford loan before you ask a cosigner to help. The point is to avoid asking them to help you make any of your payments.
  3. Added party – If you have a parent with credit today, he or she could add you as an additional party on their account. Credit cards companies are often able to do this. Much like a cosigner, the main account holder will be obligated to pay any debt you don’t.
  4. Credit card – It is sometimes possible to get a credit card in your name starting out. It may be hard to find these opportunities, but it’s worth looking. Your starting credit limit will be small, but if you build a good payment record the credit card company may increase your credit limit over time.

Here are a few other rules to remember:

Get credit before you need it. If you have no credit history and need to borrow for the first time, it is difficult to get credit. It is much easier to borrow money when you just want a small amount and you don’t actually need the money for a purchase.

Remember to pay your bills. It is critical to watch your due dates. Be sure to track your obligations. Remember that many billing statements are considered a courtesy. If your bill is lost in the mail, you are still responsible to pay it on time.

Monitor your credit. There are several websites that allow you to check your credit score. If you type “check credit score for free” into your web browser, you will see several options. Some of these sites will monitor your credit for free, and give you tips on how to improve your score.

Follow these tips, and you’ll be on your way to building a solid credit file that saves you money, reduces stress and helps you make the most of every penny you earn.


Dan Wienckoski, COO, joined NCP Finance, the premier Credit Service Organization (CSO) lender in the country, in October of 2010. Mr. Wienckoski is a CPA and has extensive financial and operations management experience. In addition to holding operational positions in a credit union, a commercial bank, a finance company and leasing companies, Mr. Wienckoski worked in the short-term lending industry as a chief financial officer and vice president of business systems integration. He has a B.A. degree in both finance and accounting from Washington State University.

NCP Finance creates value and provides service excellence to CSOs. For reference, visit NCP at www.ncpfinance.com.

Information provided is not endorsed by Check `n Go and is for informational purposes only.