Tab One

No Credit History?

It's the old catch 22. You cannot establish a credit history or credit file without having credit, and you cannot get credit without a credit history. But if you work at it, this problem can be overcome. While you create a history, be sure your efforts will be reported to the credit agency such as Veda.

Use the credit history of a family member or friend to leverage yourself into credit in your own name. If you are added as a joint party or authorised user to another person's credit card, the finance lender or bank may report the account's payment history on your credit file.

If you have a bank account, start by making regular deposits and create a savings plan. That way the bank are more likely to lend you money as you have a good history with them.

Credit cards may also be a good way to get started. As you use the card and make payments, you establish a credit history. These cards have high interest rates, but your goal is only to charge what you can afford to repay. As you repay the debt, you establish a repayment pattern seen by other creditors.

If you still have difficulty obtaining credit in your own name, consider a co-signed loan. With a co-signed loan, the item you pledge as collateral (such as a car) minimises the risk to the credit provider. With a co-signed loan, your co-signer is equally liable for the balance. Spreading the responsibility for repayment in this fashion minimises the lender's risk. Successful repayment of these types of loans can then be used to establish your own credit history.