Oftentimes one of the first suggestions offered if a person needs to either build or rebuild their credit is to get a secured credit card or, if that’s not possible, to become an authorized user on another person’s credit card.
But what if you want to build your credit but also stay away from credit cards the same time, what options do you have then? For answers to this question, read the tips and advice below. Enjoy.
The first thing to keep in mind when beginning the process of building your credit without using credit cards is that, since your credit score is partially determined by the number and diversity of credit cards that you have, it will hurt your score to actually not have a credit card. In fact, 10% of your credit score is made up of this factor, and frankly consumers with the best credit scores are usually the ones that have some type of revolving credit.
10% isn’t a lot but, if you have no or low credit to begin with, it can make a difference.
Also, if this is your first time building up credit, a non-revolving credit account such as a mortgage or car loan might be a bit more difficult to obtain without any type of credit score. If you do manage to get a car loan without having revolving credit, it is absolutely vital that you make your payments on time every single month so that, little by little, your credit score improves. It’s also possible to get what banks and credit unions call a “credit builder” loan, so definitely check to see if you qualify for those.
If you are trying to rebuild your credit and already have a credit score, even though it might not be a good one, it might be easier for you to get a non-revolving credit account than if you had no credit score at all. More than likely you’ll be forced to pay a higher rate because of your bad credit score, but just like a person with first-time credit, if you make sure you pay off your new non-revolving credit account on time, every month, your credit score will slowly improve.
No matter which type of consumer you happen to be, either a first timer or someone with already established credit, tracking your credit as you go is important. On websites like Credit.com and others you can see your credit data, most of the time for free, and some have personalized guides that will help you to improve your score.
Most of these guides will also recommend that you apply for a credit card but, if you’re still not keen on doing that, ignore their advice and focus on other types of credit that you might qualify for and that will help you to build your score.
The point is that, although it might be a bit more difficult to get a high credit score without using the type of revolving credit that a credit card offers, it’s certainly not impossible.