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I have no credit yet. My friends and I are renting an apartment, and it was a pain to find a guarantor. Now, we have to set up the utilities. I called the electric service company, and the customer rep said I can pay a deposit of $200 or let them run a soft credit check on me. I said go ahead and run the check. He said nothing came back. Is this because I have no credit, or could it be because I didn't update my social security after US citizenship naturaliztion? Also, as a person without credit or someone to help me financially, how can I start building credit effectively?

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You can start building credit effectively by getting a secured Credit Card. For these cards you have to put down a deposit and in exchange you get a certain credit limit. You can use this secured CC like a normal CC and at the end of your billing cycle you will receive your statement which you should pay off in full each month.

Before you decide to go for one secured card make sure, you find a free one (= no annual fee). The interest rate is not good on these cards but this doesn't matter as long as you pay off your statement in full each month.

You should also make sure, that this card reports to all three major credit bureaus and not only to one.

Very important: You often will find the advice to carry a small balance over each month. This is absolutely not necessary and would cost you only interest. The key is to keep the card active (in example pay one thing each month around $10).

If you follow these tips carefully, you can build your credit in several months (at least 6). Make sure to monitor your credit score either by annualcreditreport.com or sites like creditkarma.com

Good luck!

  • Thank you so much for your advice. As for my identity not showing up in a soft credit check, is this because I have no credit? – Skipher May 13 '16 at 22:58
  • Your situation sounds like there is nothing in the database about you. This also called "Thin file". I would advise you to sign up to some free credit score checking site which I mentioned above and then you get an idea what could be returned. – Freddy May 13 '16 at 23:10
  • @Skipher Do note that this is functionally the same as putting down the alternative $200 deposit with the utility company, if you like irony. But yes this way will help you get credit as well and will likely be easier to get your deposit back. – CQM May 13 '16 at 23:28
  • @CQM in addition to this, the credit score can be used everywhere and not only with this utility company. – Freddy May 13 '16 at 23:30
  • @CQM I'm sorry. What is functionally the same as putting down $200? I understand that building credit essentially means that I will have to pay financial institutions but I don't have time right now to build enough credit to avoid the deposit – Skipher May 14 '16 at 1:12

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