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How to Build Credit Without a Credit Card

It’s a common misconception that you need a credit card to build credit. You could go your whole life without ever having a credit card and still be able to establish a credit history.

Having a strong credit score can earn you the best credit perks, insurance quotes, financing options, mortgage rates, and so much more. If you don’t want a secured credit card, then there are other ways for you could build your credit successfully.

Here are some ways for you to build credit without a credit card.

Make Rent Payments Using Credit

Remember, credit isn’t just used for utility bills. You can also use credit to make your rent payments as well! If you are one of the millions of apartment renters in the U.S., your rental payment history is likely to be invisible to the credit bureaus.

Most landlords don’t bother to report rental payment activity to the credit bureaus. However, the credit bureaus will incorporate timely rental payments into credit reports if that information is submitted to them.

This is a perfect opportunity for you to build your credit if your landlord reports your rent activity to the credit bureaus. That way, you’re paying your rent on time while building your credit!

Credit Builder Loans

Banks and credit unions offer credit builder loans to help people build their credit without the use of a credit card. With a credit builder loan, you would take out a small amount (approximately $1,000 or less) and place that money into a savings account.

Then, you make on-time payments for a set amount until that loan is paid off. Once that loan is paid off, those funds will become available to you. It’s basically like paying off your loan ahead of time.

Always Pay On-Time

Perhaps you have multiple lines of credit without the use of a credit card. These lines of credit may include:

  • Federal student loan
  • Car loan
  • Auto loan
  • Mortgage Payment
  • Home Equity Loan
  • Personal Loan

One thing that you want to keep in mind is that not all loans are created equal. Particular loans have a more significant impact on your credit reports than others, and certain types of loans directly affect your ability to build your credit.

So, even if you don’t have a credit card, you are establishing your credit history as soon as you take out a loan. Make sure that you pay off these loans on-time. Late or missed payments will result in a bad credit score and additional negative information on your credit report.

Pick & Choose Your Available Credit

Credit lenders tend to make many lines of credit available to you at once. They do this because they want you to max out your lines of credit, so you’ll begin paying high-interest rates over long periods. The easiest way to max out your credit lines quickly is with a credit card.

Maxing out your lines of credit will signal to credit lenders that you’re facing some financial troubles. 30% of your FICO score is based on your credit utilization ratio. Your credit utilization ratio measures how much you’re using your credit limit.

You want to make sure that you’re not using your credit limit too much, or else your credit score could falter. The less credit that you use, the higher your overall credit score will be. The easiest way to avoid high credit utilization is to avoid credit cards and keep a watchful eye on how often you’re using your credit.

Get Additional Credit Help

So, as you can see, it’s not necessary to obtain a credit card solely for the reason of building your credit. You may not trust yourself enough to have a credit card without going on a spending spree. If this is the case, then any of the options mentioned above may be right for you.

Also, hiring a third-party credit repair company like The Credit Repair Team to help you manage your credit accounts may be a viable option for you to consider. This will help you to keep track of your credit installment loans, auto loans, rental payments, utility bills, and other personal loans to ensure that you’re making on-time payments regularly to all creditors.

The Credit Repair Team offers free credit score analysis and consultations to help you get on the right track towards achieving financial freedom.

With a high credit score, you can spend your money the way you want to spend it. You can take advantage of all of the credit perks available and make money moves that will make a massive difference in your life.


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