How to build credit without a credit card? Is it possible to build your credit without using credit cards? Having a credit card is one of the fastest ways to build your credit and improve your credit score. It is easy to get credit cards and simple to manage.
What if you want to build your credit without using a credit card?
In this article, we are going to walk you through 8 tips you can use to build your credit without using a credit card.
If you don’t want to have a credit card, you can still build your credit score by becoming an authorized user of someone else credit card.
The user of the credit card can add you to his/her account manually. He can also call his credit card company and request them to add you to his account as an authorized user.
The following are some of the information about you he/she will need to provide.
- Your full name
- Your date of birth
- Home and mailing addresses
- Social Security Number
Once you are on to the account, you can start using his credit card as your own. All account activities will be used toward both of your credit reports. This will help you build your credit and improve your credit score.
You must make sure that the credit card issuer will report the account activities for both of you.
It is also important that both of you agree on how to use the card. This is because your credit score will be negatively affected if one or both of you misuse the credit card.
Tip 2: Get your bill payment history reported to major reporting companies
If you pay rent, utility bills, phone bills, etc, you can use your payment history to build your credit. All you need to do is to contact the businesses you deal with and ask them to report your accounts activities to the credit reporting companies.
There are three main credit reporting companies in the USA and you can see them below.
Once the credit reporting companies receive your payment and account activities, they will compile your credit report. In addition, they will use the information they received and calculate your credit score.
Make sure that you make your payments in full and on time. Otherwise, you will receive a bad credit score and it will be difficult for you to build it.
Tip 3: Apply for an installment loan
An installment loan is a loan that gives you an option to pay it off overtime in scheduled installment payments.
As you pay off the loan, your lender will report your credit account activities to the three major credit reporting companies we discussed above. As a result, you will be able to build your credit.
Make sure that you meet all your payment requirements. One missed payment can ruin your credit report and put your credit score in danger.
Tip 4: Get a student loan (for students)
Student loans are great for building your credit. Credit reporting companies will collect your payment history, compile your credit report, and calculate your credit score.
Make sure that you meet all your payments. If you cannot meet your monthly payment, talk to your lender before the payment due date to discuss your options and the proper steps to take. You must avoid late payments on your credit report.
Related article: How to go to college without a student loan
Tip 5: Use peer-to-peer loans
You can use peer-to-peer loans to build your credit without using a credit card. A third party will connect Moneylenders and borrowers. There are a lot of companies that provide peer-to-peer services.
The lenders and borrowers will sign contracts or agreements regarding the loan.
When you have this loan, you must meet all loan requirements. As you pay off the loan, you will be building your credit.
Tip 6: Get a personal loan
A personal loan can be a good start in building your credit without a credit card.
You will continuously build your credit and improve your credit score as you pay off the loan.
Tip 7: Get an auto loan
A car loan can help you build your credit without a credit card. Your payment history will be used to calculate your credit score.
If you had a loan already, you have a credit and a credit score already.
Follow this link to learn how you can check your credit score.
The following link can help you learn the credit score you need to get an auto loan.
Tip 8: Get a mortgage
Do you have a house or are you planning to buy one using a mortgage?
Having a mortgage will help you build your credit. Although it may be difficult to get a mortgage without a credit score; there are some lenders who will give you a mortgage without having a credit score as long as you meet other requirements they may have.
As you make your house mortgage payments, you will be building your credit at the same time.
Try to make your monthly payments on time and avoid a foreclosure or bankruptcy. These events will negatively hurt your credit report and credit score for a long time.
Related article: What is a good credit score to buy a house?
