Building good credit is essential for financial stability and big purchases. Whether you’ll need to take out a mortgage to buy a house, take out a car loan, or borrow money to start a business, a good credit score will help you get better rates.
But a good credit score doesn’t always come easy for credit newbies. If you have bad credit, repairing it often takes time and effort. Meanwhile, having no credit at all is almost more of a hurdle. Why? Because lenders are especially fickle about loaning money to someone whose ability to repay is still unproven.
While using a credit card responsibly is a great way to build or improve your credit, not everyone has a credit card to help them build credit. It’s far from the only method that works. Fortunately, there are several ways to raise your credit score without a credit card.
7 Tips to Raise Credit Scores Without a Credit Card
1.) Make payments on time
One of the most crucial factors in determining your credit score is your payment history. Paying your bills on time shows lenders that you are responsible and reliable. Late payments can significantly negatively impact your credit, so it’s essential to prioritize paying your bills on time. Set up automatic payments or reminders to ensure you never miss a due date. This allows you to quickly have a positive payment history and better credit in just 30 days.
2.) Consider a secured credit card
A secured credit card may be a good option if you’re struggling to get approved for a traditional credit card. With a secured credit card, you’ll need to make a deposit that will serve as your credit limit. You can build your credit score by using the card responsibly and making payments on time. However, choosing a secured credit car with no annual fees and a low-interest rate is crucial to avoid additional costs.
3.) Become an authorized user
If you have a friend or family member with a good credit history, you can become an authorized user of their credit card. As an authorized user, you’ll have access to the credit card and can use it to make purchases. The account holder is responsible for making payments, but your credit score will benefit from their responsible card use. Choosing someone you trust and who uses their card responsibly is important to avoid any negative impact on your credit score.
4.) Pay off debt to help your credit
High levels of debt can have a significant negative impact on your credit score. By paying off debt, you can lower your credit utilization ratio, which is the amount of credit you’re using compared to your total credit limit. Keeping your credit utilization ratio below 30% is recommended to maintain a good credit score. Make a plan to pay off debt by prioritizing high-interest debt and setting a budget to avoid accumulating more debt.
5.) Monitor your credit report
Keeping track of your credit report can help you identify errors or fraudulent activity that can negatively impact your credit score. Every year, you’re entitled to a free credit report from each of the three major credit bureaus. Check your credit report regularly to ensure all information is accurate and up-to-date. Contact the credit bureau to dispute the information if you notice any errors.
6.) Use this tool to improve your credit score
Give your score a quick jump-start with alternative credit report agencies that can help you build your credit score up by reporting non-credit bill payments, such as rent and utilities. Using a tool like Cambio you can build credit without relying on a credit card. The goal for free credit builder apps like Cambio is to allow you to get into the routine of on-time payments that you make every month, which results in positive payment history in the score calculation.
7.) Get a credit-builder loan
A credit-builder loan is a type of loan designed to help individuals build their credit scores. With a credit-builder loan, the lender holds the loan amount in a savings account until the loan is paid off. You can build your credit score by making timely payments on the loan. However, choosing a credit-builder loan with a low-interest rate and no fees is essential. If you have a low credit score or even zero credit, this type of loan can really jump-start your credit history. You don’t need a good score to qualify, but you do need to have an income. Check out Cambio’s 0% interest credit builder loan!
Raise your credit score, one step at a time
Having good credit is essential for financial stability, but not having a credit card doesn’t mean you can’t increase your score. By following these tips, you can raise your credit score without a credit card and improve your financial well-being. Remember to make payments on time, consider a secured credit card, become an authorized user, pay off debt, and monitor your payment history.
If you can make one of these options work, you should be on your way to an improved score in no time. Just remember, it’s important to take the process seriously and pay all your bills on time every single month — no matter what. While it’s true that a slew of on-time payments can help your score climb, it’s also true that just a few late payments can completely wreck any progress you’ve made. And when it comes to building or improving your credit, the last thing you need is another mountain to climb.
Put bad credit behind you and start improving your credit score today.
