Most new graduates don’t have an established credit rating yet. This is a problem for those who are actually trustworthy individuals, but do not have the credit score to reflect that reality.

To add to the confusion, most debtors are not willing to take a chance on lending money without a good indication of creditworthiness. Although it may not seem fair, this makes perfect sense from the lender’s standpoint. After all, would you honestly take a chance on an unknown borrower when there are millions of other people applying for loans with clear credit standings and strong histories of repayment?

Fortunately, for these young people, there’s an practical method of building a credit history. It begins by applying for a secured credit card (one that reports to credit bureaus). Instead of basing credit limit on credit history, it bases it on a one-time deposit. This card can then be used for staple purchases, such as groceries and utilities, and as long as the individual repays this credit card back in full or at least stays on top of minimum payments, it will reflect positively on a credit history and will make it much easier to be approved for future loans!

The idea of building credit from scratch may seem discouraging to students and recent graduates. However, it must be done in order to have the best chance of growing their credit the right way. If a positive credit history is sought, then a little planning and time can certainly make it happen!