Nowadays, it’s really important to have credit history and especially a good credit record. But, to have credit history, you must first build it. And to do that you need to get yourself a credit card, right? Not necessarily.
Getting a credit card is probably the fastest way to starting to build your credit history. But it’s not the only way. In fact, there are quite a few other ways to establish a good credit rating without opening a credit card in your name. You can find some of them below:
Take good care of your student loan
Millions of Americans have student loans. If you’re one of them, you may already have a credit file without even knowing it. Student loans are just like any other type of loan. So take care to make the monthly payments on time, because this will improve your credit score.
Use your rent to get good credit
Some rent-reporting service take the rent you are paying and put it on your credit report. This can help you create a positive history of on-time payments. The downside is that not every credit score takes these payments into account. So you need to look for those that do.
Get a co-signer
You might not know this, but its possible to get a loan for an unsecured credit card using a co-signer. What’s important here is that you understand that, if you don’t pay, the co-signer will be held responsible for the full amount owed.
Become an authorized user on someone else’s credit card
If a family member is willing to add you as an authorized used to his or her credit card, then you’ll enjoy both the benefits of having a credit card and the chance to build credit history. But although you’re not legally obligated to pay for your charges, you shouldn’t go wild with it.
Also, make sure to check whether the card issuer reports authorized user activity to credit bureaus. This is important. Otherwise, your credit-building efforts will be for nothing.
If everything goes well, the account and its age will appear on your credit report. And because the main account holder is responsible for all for all debt obligations, your score won’t fall even if the main user fails to pay his bills.
Get a credit-builder loan
A credit-builder loan helps people build credit. Community banks and small financial institutions will sometimes offer these small loans to their customers. The borrowed amount is put in an account controlled by the lender. The borrower has no access to these funds until the loan is repaid.
Banks will give credit-building loans to consumers even if they have very low credit scores or no credit history at all. The downside is that the service isn’t free. You still have to pay interest.
