Are you on the list of people who want to improve their credit score without having a credit card? You are on the right page. People who want to boost their credit rating think the only way to do it is through credit cards. But this isn’t the only option as there are many other ways. We admit that credit cards are the quickest way to improve financial standing. But let’s look at another course to make the process easier and hassle-free.
What is a credit score?
If you are working to improve credibility or brand development, you should know about your credit score. In simple words, it’s a way to measure financial health. For instance, when you apply for a loan, lenders consider your credit score as a surety that you will return the money. Every person, like mobile companies, banks, and other lenders, checks credit scores to know whether you are eligible to pay back or not. According to stats, only 40% of Americans have a FICO credit score of around 700. So, it’s better to ask for the credit report at the end of each session. In this way, you can ensure there isn’t a mistake against your credibility.
Can we improve our credit score without a credit card?
The short answer to this question is YES. It’s possible to build a credit score without getting a credit card. Credit card companies are not the only ones that report your repayment history to the agencies. Three main credit bureaus keep a record:
So, next time before applying for a loan or anything, your lender will preferably check your score through these companies. But if you want to build a score without a credit card, then it’s possible, as we know, that the credit system is a vicious cycle.
How to improve a credit rating without a credit card?
If we look at the record, an average American has four credit cards. Thus, people think this is the only way to improve credit history. But there are others, and it’s not as simple as it looks as there are many tricks that you need to consider.
Get a phone plan in your name:
One of the most tried, tested, and easiest ways is to get a phone plan in your name. The phone companies also share your data with the credit bureaus. It will include payment history and name in the details if you apply for the phone plan. Furthermore, it means that a one-time phone payment can improve your credit score. But before applying, ensure you can afford one because it appears on the report. Apart from this, if a Phone Company rejects your application, it can negatively impact your new credit report.
Make regular rent payments:
The other way to build a credit score without a credit card is by making a rent payment. Sometimes the rent payments are also reported to the credit bureaus. But this isn’t standard practice among landlords and property managers. But before renting a house, ensure whether your landlord is going to report or not. If your landlord is reporting to any of the above exchanges, it can build a score.
Pay Student loans:
If you have applied for student loans, you should know that payment history will go into three credit bureaus’ records. So, if you are making one payment of a loan, then ensure that it’s included in the payment history. Apart from this, it’s vital to remember that one late compensation can negatively impact your score and history.
Apply for a credit builder loan:
The credit builder loan is one of the most famous ways to boost credit score. In this way, the lender deposits amounts from $300-$1000 in a secure account. But you can access this amount instead of making regular payments to pay off this debt. So, it impacts your account well when you are paying off a loan without using extra money. Most people use credit builder loans to boost their credit rating.
Get a personal loan:
Apart from this, you have the option of getting a personal loan to improve your credit rating. In this way, you make on-time payments to pay back the loan as early as possible. Personal loans have higher APRs compared to credit builder loans. So, this is a fantastic option to give a solid boost to the credit score that was struggling before.
Play with the existing loans:
If nothing is working, then you have a chance to repay the existing loan. For instance, you can make a start by repaying a student or any other default loan. But it’s a time taking process, but ultimately it will work in your favor. Apart from this, you also have a car loan option if you can make an on-time payment. However, for this, you can look for deals with medium APRs to pay off monthly.
You can become an authorized user:
You can become an authorized user as many credit card companies allow this. The authorized user receives a physical card with his name and accesses the primary card holder’s credit line. So, the main person enables you to make purchases and do other activities. Later, it will help you enter credit bureaus without applying for your card. But if the primary cardholder fails to pay the bill on time, then it will impact your history too.
Other tips to boost credit rating without credit card:
You can choose any of the above information to increase your credit rating without having a card. But other points also play a crucial role in success.
- Don’t forget to make on-time payments.
- Pay installment loans on time.
- Pay bills under your name to build a credit history
- Keep a check on the errors of credit card reports
- Keep track of your spending (The best way is to use an invoice generator to keep track)
- Try to build your credit history by making on-time payments
Above all, remember to close all accounts and credit cards that you are not using anymore. By following these tips and making on-time payments, you can get your credit score back on track without applying for the card. These are small yet vital things that you shouldn’t forget in the long run.