Building Credit Without Credit Cards
If you have low credit, you know how hard it can be to build your credit back up. If you don’t want to use credit cards, there are several alternative options available. Some of them may even work out better for you. Therefore, if you’re afraid of going deeper into credit card debt, this article is for you. This article will go over the top seven ways to build credit without credit cards.
How do You Build Credit Without a Credit Card?
1. Report Your Rent
If you pay rent each month, you can have this reported to the credit bureaus. So, if your landlord doesn’t report it already, you can register with sites like Rental Kharma or Experian’s RentBureau. As long as you make on time payments, this will help raise your credit score. This is an easy way to build credit without using a credit card.
2. Pay Your Student Loans
Your student loans report to the credit bureaus. You can use these to build credit without credit cards. You should make your payments on time each month. It is also a good idea to double check that they are in your name. This will also reflect positively on your credit history. However, if you miss payments, this can drop your score quickly as well. So, if you want to cut your interest rates, you can apply and have your loans consolidated with a company like Sofi.
3. Take Out a Credit Builder Loan
You can build credit without credit cards by taking out a credit builder loan from Self Lender. A credit builder loan is a secured form of a personal loan. Also, it acts as a savings account for the loan, and there is no credit check. It reports the payment activity to the credit bureaus. You open an account and deposit $12 to get started. You choose your amount, and you pay it over a year. Once you have paid it, you get access to the money you’ve put in. This loan has an interest rate of 10.67 percent. This means you will pay a little more than the original loan amount by the time the year is up. For example:
- A $550 Loan – You pay $48.50 for 12 months, and you will pay a total amount of $44 in fees.
- A $1,100 Loan – You pay $97 for 12 months, and you will pay a total amount of $76 in fees.
4. Pay Your Bills on Time
Your utility company may report your payments to the credit bureaus. You can ask if they do this, and you can request for them to report your payment history. If they do this for you, you should see your credit score rise by a few points. It will also build up your good payment history, and this looks good to any lenders. They will be more likely to help you if you request a line of credit. This will help build credit without credit cards, and because you’re paying them already, it’s worth a shot.
5. Apply For a Loan Through Your Credit Union
If you bank at the Credit Union, use them to build credit without credit cards. They will look at your history with them, and not rely on your credit score as much. Also, they’ll look at your transaction history and your overdraft history. Therefore, if you have good scores in both, they may approve you for a small loan. You can pay this off and take another out to keep building your personal credit score. This can go a long way to making your credit score rise. You can also get a higher loan amount if you take out and repay more than one loan.
6. Become an Authorized User
If you know someone who will add you to their credit card account, ask to become an authorized user. Once you do this, the card holder’s activity will show up on your credit report. You don’t even have to use the card. Once they add you as an authorized user, you should see your credit score improve. However, if the card holder misses payments, this will reflect poorly on your credit history as well.
7. Peer-to-Peer Loan – Build Credit Without Credit Cards
You can build credit without credit cards by using a peer-to-peer lending site. Investors, rather than banks fund these sites, so there is a higher chance of getting approved. Your current credit score determines your risk rate, and the investors will see this. This type of loan will show up on your credit report as well. Furthermore, if you make on time payments, you will see it go up. Companies like Avant and Lending Club are good examples of peer-to-peer lending.
This article has gone over the top seven ways to build credit without credit cards. We talked about alternative loan options like a credit builder loan. We also discussed getting your rent payments reported to the credit bureaus. Each of these small things can help raise your credit score. Lastly, the best part is, you’re already doing some of them. The next step is reporting them to the credit bureaus. Try some of these methods and make on time payments. You should be on your way to a higher credit score.
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