Build Credit without a Credit Card
We hear this all the time from potential clients and even some who are enrolled in our credit program. The fear of the credit card, usually this fear of building credit with a credit card comes from your past experience or lack of experience with a credit card. You probably opened it not knowing how to properly use it to build your credit, maxed it out and then it went to charge off or collections. Using a credit card wisely takes being educated on how a credit card works, the best way to use a credit card, how to pay a credit card bill, financial discipline and understanding your own finances. Those things of course come over time, everybody falls off the bike the first time without training wheels. Having the proper credit education will help guide you on a better understanding the use of a credit card.
We wanted to provide a few ways on how to build credit . Here are a few ways to build your credit without using credit cards. Remember these ways will only increase your credit score to a certain point. There are five elements that factor your credit scores which are Payment history, Utilization, credit history, new credit, and credit mix.
Credit Builder Loans
A credit builder loan is similar to a secured credit card. Once you’re approved, the funds from the loan are placed in a savings account or CD until you’ve repaid the loan. Then, the money in your savings is yours to keep. Your payment history is included on your credit report, so your timely payments will boost your credit score as long as you make all your monthly payments on time and don’t default. Self (AKA Self Lender)
Consumers who want to use Boost must allow the product to scan their bank account transactions to identify utility and cell phone payments. Information about payments will appear in their Experian credit report and be used when certain credit scores are calculated from that data.Boost will count only positive payment history, Experian says, so missed utility or cell phone payments will not hurt your score.
Report Your Rent
Rent reporting companies will allow you to report your rental history as far back as 24 months. You have to pay a monthly fee for the service and many FICO scorings modules do not use rental history when factoring in the scoring (excl. Experian Boost).
Authorized User aka Piggy Back
Become an Authorized User (on Someone Else’s Card)This method requires teamwork with someone you trust. Credit card users can request that an authorized user be added to their account. But be careful: If the account holder doesn’t pay the bill, your score will suffer alongside theirs. Plus, you might not be able to remove yourself from the account, so you have to be willing to team up for the long haul. Most people who are added on as Authorized Users do not receive the additional card from the primary.