There is little doubt that it has become more difficult to get approved for new credit in these challenging economic times. In response to sluggish employment and a stagnant economy, most lenders are still operating in a risk-averse mode and only approving those applicants with the most stellar credentials (high credit scores, high incomes, large down payments). It gets even harder and more frustrating for those people who may have some degree of negative payment history showing on their credit reports and are trying to re-establish their credit history.
While there are no “sure-fire” means of easily re-establishing new credit, here are some strategies that have worked to help others in this same space:
Open a bank account. While bank account information (checking and savings accounts) is not typically reported to Equifax, Experian or TransUnion, this information is often requested on credit applications. In addition, doing this helps you establish a relationship with a lender who also has various lending products. Many lenders will take existing customer relationship information into consideration when reviewing an application for credit, which could help increase your chances of being approved.
Request the overdraft feature. Overdraft protection is a checking account feature which gives a person has a line of credit to write checks for more than the actual account balance. Instead of getting charged a fee for bouncing a check, overdraft protection will, in effect, provide the account holder with an instant loan. Some banks will report this as a line of credit to the credit bureaus (ask if they do when you are signing up for a checking account). Note, some banks do charge a fee when the overdraft feature is accessed and interest rates will be charged on the overdraft amounts.
Apply for a retail credit card. Historically, department store, retail cards or gas credit cards are usually easier to obtain than a bank-issued card with a Visa or MasterCard logo because they make revenue from the purchase of merchandise in addition to revenue associated with the credit issuer.