10 Ways To Build Your Credit Without A Credit Card
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Credit cards have been known to be a great tool to build credit. They offer flexibility, are simple to use and many offer some cool rewards. Most importantly, they have the ability to affect a number of different aspects of your credit score.
With that being said, not everyone is great at managing credit card debt so using this method is definitely not for everyone. Luckily, there are other ways to build a strong credit history.
Below are 10 ways you can build your credit without using credit cards
1. Become an authorized user
This one is pretty straightforward. If you have a loved one or a close friend that has a credit card, see if they would be willing to add you on as an authorized user. As an authorized user, you are able to use the credit card as your own while at the same time benefiting from their credit card use. Even if you never charge anything to the card, the activity on the card from the primary holder is still reported. This in turn can give a boost to your credit.
With that being said, you to have to be careful with using this method. You want to make sure you do not rack up a high balance or miss any payments. This could have the opposite affect and do damage to your credit. Trust between you and the primary card holder is key to this working to your benefit.
Lastly, make sure the credit card company reports authorized user activity. If it does not, this method would be a waste of time for you.
Typically, rent payments are not reported to the credit bureaus by landlords. It is possible though, to have your timely rent payments reported if they are submitted. If you are thinking about renting, inquire with the landlord as to whether they report rent payments to the credit bureaus. Also, there are some online rent payment service providers that will report your payments if you ask them to.
3. Personal Loans
There are banks that will give you an unsecured personal loan. In this case, you borrow a set amount and make fixed payments each month. These types of loans are typically used to consolidate debt at a lower interest rate.
4. Auto Loans
Thinking about becoming a homeowner? Taking out a mortgage loan is not a quick fix but could work in your favor. Keep in mind, your credit score may go down when you first secure the large debt. As you make regular monthly payments, your credit score will start to go up.
6. Make student loan payments
If you currently have student loans you are paying off, making those payments on time will help boost your score and credit history. These types of loans affect your credit the same as any other loan would. With that being said, missing payments will have the opposite effect and damage your credit.
7. Call up your utility providers
When it comes to your utilities (water, gas, electricity, cable etc) they typically will not report to the credit bureaus if you are making on time payments. It is possible though, so give them a ring to check.
8. Apply for a peer-to-peer loan
A P2P loan is backed by investors instead of a credit union or bank. There are different companies online that do this type of lending. Where your credit is at will determine what type of loan you will be eligible for. On a positive note, the guidelines are not as strict. So even if you were turned down for a loan from a bank, you may still be approved. These types of loans should show up on your credit report and play into your score.
9. Apply for an installment loan
If your credit report is limited, an installment loan may be the answer for you. Make timely payments and you will show creditors that you are a responsible borrower. There are retailers that will offer installment loans as a promotional offer. They will give you a low or 0% introductory interest rate for a specified period of time. If you happen to have the cash saved up, this might be a good option for you. Just make sure you have the full amount upfront so you can make the payments on time before any interest starts.
10. Try an alternative credit score
Alternative credit basically looks at payment details related to expenses like utilities, internet, phone, insurance, rent and student loans. You can give a lender this type of nontraditional payment history and by law, they have to take it into account.