Credit cards are everywhere and you can use them for almost anything and earn reward points for using them. It is also a great way to build credit history and improve your score. Though it is not the only way to improve your credit score. Here we have listed various ways in which you can get a good credit score without using a credit card. For the best credit free money options, you can of course try Cash Now Pay Later with line. However, here are the other options available.
Loan for good credit
Whenever you opt for credit, whether it is a credit card or any other kind of loan, it is reported to the credit bureaus such as Equifax, Experian, and TransUnion. There are various types of loans that you can opt for in order to build your credit score.
Almost every auto dealer reports purchases made through credit to the credit bureaus. As a result, when you make a one-time payment to buy any vehicle, it helps you build your credit score.
When you make the entire purchase and pay back the amount, it will reflect positively on your credit score. The basis of creating a Credit score is to have some purchases on credit. If you don’t have any purchases on credit, it would not reflect on your credit score.
The downside of opting for an auto loan is that you will also have to pay a higher interest rate and in case you fail to do so it will reflect negatively on your credit report.
Now I don’t suggest that you go for a student loan just to build a credit history but if you are planning to pursue higher education or just want to take up some courses, this can be a good way to build your credit history.
The payment that you make towards any course using credit is also reported to the credit bureaus and when you pay your student loan on time it enhances your score.
The downfall of this method is that it will increase your debt and any failure to pay back the loan can bring your credit score down.
Personal loans are also a great way to have some credit history and build a good credit score. Though make sure that the lender you are choosing reports the same to credit bureaus otherwise there is no benefit in opting for a personal loan.
The downfall with opting for a personal loan is that you will have to make monthly installments having higher interest rates.
This is not something that you opt for just to build a credit history. If you are planning to buy a home and have already opted for a mortgage loan, it is suggested that you make the installment in a timely manner and get it to reflect positively on your credit score.
Generally, it takes around 15 to 30 years for an individual to pay back the entire amount. But whenever you make a big payment, it will reduce your debt level and will showcase your credit score.
A drawback of this method is that it will increase your debt and it may not be available to people having a poor credit score.
Credit builder loans
The purpose of this loan is to solely help you build your credit history. The amount borrowed by you for this loan is locked in a bank account by the lender. Until you make any payment, the amount stays in the same status.
As soon as you pay back the loan, you can get access to the fund deposited in the bank account. When you make a one-time payment to this loan account, it reflects positively on your credit score.
These loans have a lower rate of interest and are accessible to even individuals having no credit history or poor credit score. The downfall of using this method is that to access your fund account, you will have to pay back the entire amount.
Pay your bills for good credit
There are some utility firms and rental companies that report your bill payment to credit rating agencies. This will go a long way in helping you build good credit without a credit card.
If you have got a phone plan under your name, the chances are high that your phone company is providing your payment details to the credit rating agencies.
Utility bill payments
Just like phone payments firms, utility companies often provide your bill payment information to the top credit rating agencies. So, whenever you make a payment it reflects on your credit score for being a responsible individual.
It is not very usual for landlords to report receiving rents to credit rating agencies. However, it is worth giving a try. You can also opt for any third-party rent reporting to agencies. They will help you provide rent payment information to credit bureaus.
The bottom line on good credit
It is always a great idea to diversify your credit history to build a good credit without a card. Opt for various credit-improving instruments as mentioned in this article. Also, try to make payment in full each month so as to reflect that positively on your credit score.
It is always beneficial when you are a responsible individual paying your bills on time and managing a healthy debt to income ratio. In the end, having a good credit score is all about having good personal finance habits.