Credit cards are probably the best tool available to you when it comes to building credit. They offer rewards and directly affect many aspects of your credit score.
However, maybe you have trouble with impulsive buying with a credit card and you need a break from them. Whatever the reason is, there are other ways to build your credit.
1.Authorized User Status
If you have a close family member or friend who has a credit card, you could ask if they would be willing to add you as an authorized user. This means you can use the primary cardholder’s credit card and piggyback off of their credit card activity. Even if you don’t use the card, the card activity can be reported to the credit bureaus and boost your credit.
The downside to this is if the primary cardholder racks us a high balance and doesn’t make payments, it could end up damaging your credit. You’ll want to choose a trustworthy and responsible cardholder.
2. Credit builder loans
Credit unions, banks, and other companies sometimes offer credit builder loans to help borrowers build credit. Typically, you borrow a small amount (often $1,000 or less), which is put into a CD or savings account. You make payments for a set amount of time until the loan is paid off, at which time you can access the funds. Basically, you’re paying off your loan ahead of time.
3. Federal Student Loans
These show up on your credit report and if they are paid on time, can help build positive payment history. Of course, this is only a possibility if you’re pursuing a degree. This wouldn’t be something you’d do just to build credit.
If you have a mortgage or are looking to get one, these help your credit. Your credit will probably take a hit when you first assume the huge debt, but it will rise over time with monthly payments. You might not even consider this, as if you are looking to build credit, you may not be ready for homeownership. But whenever you are ready for it, having a mortgage can raise your credit score with regular monthly payments.
5. Auto loans
Like mortgages, auto loans will help you secure property and give you the opportunity to build credit history.
6. Personal loans
Some banks offer unsecured personal loans, where you borrow a fixed amount of money and make fixed payments each month. Personal loans are often used to consolidate debt and pay it off at a lower interest rate.
Some online rent payment service providers let you pay your landlords electronically and will report your rent activity to credit bureaus if requested. Credit Bureaus will incorporate timely rent payments into your credit report if that information is submitted to them.
Just like credit cards, you have to make your payments on time, month after month if you want a positive credit history. While credit cards are the most convenient ways to build credit, these 7 ways to build credit are also options for you if you’re not comfortable with a credit card.