As much as you don’t want to do it, there may come a time when you need to borrow money. You may need a new vehicle or want to by a home. That means you need to have good credit. But, can you get a good score without a credit card? The short answer is YES! Yes you can!
Credit card companies often tell you that opening a card is the only way for you to build and/or improve your credit score. However, that is not true. Yes, it is honestly the quickest way to improve or even establish credit, but that does not mean it is the only way to go about getting a good score.
I declared bankruptcy in 2002. For years I did not have a credit card and did not even attempt to get one. When I finally applied for one in August 2015, I noticed my credit score was 810. I was shocked. The main reason I was surprised was because I did not own my own credit card. I am proof that you can actually increase your score – without running out and applying for credit!
The first thing you need to do before you can raise your score is to actually know your score. There is no way you can make a change if you don’t know where you are starting from.
I caution you when it comes to signing up with just anyone. Many of them will charge you a monthly fee in order to gain access to your credit score. One of them which doesn’t is Credit Sesame. It is truly a FREE way to get your credit score! I highly recommend that you use this company (over all others) when it comes to learning your score.
Now that you know where you are beginning, check out some of these tips which can help you increase your credit score.
TIPS TO INCREASE YOUR CREDIT SCORE
Become an authorized user on someone else’s card
This can be very beneficial to you as if the card holder has good credit, their spending history will transfer to your account as well! Of course, make sure that the person pays on time and knows how to handle the account.
I was on just one of my mom’s cards. It was a card she used frequently, but paid off every single month. I personally did not use the card very often. Even then, the few times I did, I would hand her the cash to pay off my purchase right away. As a result of her great credit, my report reflected the same. That greatly contributed to my increased score.
Take out a loan
An installment loan is an excellent way to build up credit as when you pay the loan back over a period of time, you are showing that you can borrow responsibly. While this is a small portion of your overall score, it can make great strides in increasing your score (especially if you do not have much else on your report).
Over the course of time, we ended up taking out a total of 3 loans – all of which were vehicle loans. We paid each loan off well before the maturity date (because we did not want debt hanging over our heads). While you may think that paying the loan early was the reason it helped my score, it wasn’t. It was allowing the loan to be paid back regularly, over an extended period of time, which showed how responsible I was with the loan which helped.
Opt for a secured card
You might think this is a credit card and it is — but in a different way. First of all, you make a deposit on the card before it is issued to you. That ends up being your spending limit. This is insurance for the bank issuing the card – just in case you do not pay the bill on time (they are not out any money).
You make charges as usual and make monthly payments as usual as well. Just make sure that the issuer reports to the credit reporting agencies so that you truly get the benefit of showing you can use credit responsibly.
Ask companies to report on your behalf
If you pay your utilities on time every single month, they might be able to benefit your credit score. You could call the companies and ask them to report your account activity to the three credit reporting agencies.
The only issue you might face with this is that they opt not to report it for you, which they are not obligated to do.