Like running a marathon without ever having run a mile, it can seem daunting to build good credit if you have no credit history. But there are many incentives for doing so. Here are three reasons to start building your credit today.
1. Buyer protection
There are plenty of credit cards for people with no credit or poor credit, and many of these cards offer some kind of buyer protection. Depending on the card you’re approved for, you may get protection against fraud or issues with a purchase, such as theft or damage. In some cases, issuers will replace or reimburse you for stolen or broken products purchased with your card.
Applying for a credit card isn’t complicated. But to get the buyer protections you’re looking for, make sure you do your research before you commit. The higher your credit score, the more options you’ll have available to you, including cards with more extensive buyer protection.
2. To get an apartment or job
You’ll want to build a credit history to prove your reliability to future employers or landlords. Potential employers, particularly in finance-related fields, may look at your credit report (but not your score) to see if you’re responsible. Keep in mind, though, that they must get your permission before pulling your credit report and notify you if you’re not hired due to your credit history. Landlords want to see a credit history that shows you can be counted on to pay your rent on time and in full.
Since building up credit from scratch can take some time, you should start well before you apply for your dream job or apartment — you’ll want landlords or employers to see a solid credit history when the time comes.
3. Better insurance rates
Another benefit to building credit is that a good credit score can get you better rates on insurance. Most states allow insurance providers to consider your credit rating. So if you want decent rates on homeowners or auto insurance, you’ll benefit from building good credit.
Going from no credit history to a solid score may seem like a lot of work, but the benefits are worth the effort. The sooner you begin, the sooner you can reap the rewards of having a good credit history.
This article updated June 14, 2016. It originally published Jan. 6, 2015.