Do you know that the youngsters of today are edgy about credit cards? These people prefer to buy by using a debit card, a third-party app or cash believing old is gold. If you are also one of them regardless of age, you are at no risk of getting into the stressful credit card debt.
On the flip side, it is challenging for you to develop a good credit status. After all, a credit card is the easiest and important tool for building good credit. Without a good credit report or score, it may not be easy for you to get a car, home or payday loans with no credit check with favorable terms. At times, you may not qualify at all for the same.
The good news is that you can still develop good credit in absence of a credit card. Here are five such ways to do so.
Report Timely Bill Payments
Most of us know that paying all bills on time is one of the essentials to good credit. This includes paying phone, utilities and cable bills on time. However, just paying on time is the job half done. You also need to report these timely payments. This is something that many of us do not know.
Unfortunately, paying monthly bills on time is something that the major credit bureaus do not track automatically. They also not get reported automatically about these timely payments. So, the only way to report these payments to any of these agencies is to contact the bill provider and request them to report the same to these agencies.
Well, this may not work, as the providers may not say yes and there is no rule to bind them for this obligation. Nevertheless, if they say yes, it definitely helps in developing a reliable payment history, which accounts for over 30% of your score.
Go for a Credit-Builder Loan
Getting a credit-builder loan or card that helps your credit rating is an effective way to borrow without having a credit rating. Herein, rather than adding money to an account and borrowing against it, you pay regularly over time and receive the full money at the end.
As the bank does not provide any upfront money, this is an advance in name only. It saves all your added money in a dedicated account. You get access to it only after you have made all the payments. Well, this would be an awful deal if you get only money at the end of the duration.
Rather, why not just put the same amount into a savings account and earn interest? However, apart from the money via a credit-builder loan, you also get something more. Whenever you pay, the bank informs about it to the credit bureaus.
Withdrawing just $200 for six months and repaying it on time can raise the credit score significantly. Just keep in mind that such loans are not provided by all banks despite them being free of any risk.
Approach a Different Credit Service
If you are making bill payments on time that your providers are not ready to report, you can approach another credit service such as FICO, Connect and VantageScore to build credit. Some of them function as free services to track a variety of your payments. They then use these details to generate an alternate score for building your credit history.
Well, it is true that many lenders will only look for the traditional credit scores and reports (by major bureaus) while lending. Thus, an alternative credit buildup may not be quite effective. Still, these service providers claim that there are thousands of lenders across the country who use alternate scores.
These simple ways can definitely help you develop a good credit rating.