Even though credit spending is on the rise, millions of people still find themselves in a position where they cannot obtain access to a credit card. In many cases, this is due to low or no credit – but how can you properly establish credit without access to a line of credit? This revolving door of confusion can make some individuals feel frustrated with credit score improvement and many give up on the notion. Fortunately, there are steps that consumers can take to improve their credit scores and build solid histories of due diligence without a credit card. If your credit score is non-existent or otherwise sub-par, then you owe it to yourself to improve the situation. Below, we will discuss some tips on how you can build or repair your credit without access to a credit card.
Rental Payments
The reality is that throughout most of our history, the payment of rent has not been something that was counted toward your credit score. By default, it still is not – but there are services out there that can be used to document your payments and report to credit bureaus. Several websites now exist that allow individuals to “opt-in” for rent credit reporting to Experian, one of the three major credit bureaus. One major company, WilliamPaid, allows individuals to process their rent payments through its website and have the amount paid directly to their landlords. In exchange, the service reports your payments to Experian and will improve your credit score over time. Remember, though: a late rent payment under this scenario can lead to a ding on your credit score later – but the company will always verify this information with the landlord before reporting it as such.
Credit Building Loans
Another way to build credit over time is through the use of credit builder loans, which usually involve a small sum of money and a credit union or other trusted entity. The loan is issued to the consumer but is locked into an interest-bearing account with the entity. The individual will then proceed to pay the loan off over a period of one to two years. Once the loan has been paid in full, the amount borrowed plus the accrued interest is released to the consumer. Due to the technical aspects of the loan process, the payment history can be reported to credit bureaus and will improve your credit score.
Report Your Own Payments
Much like with the rental programs mentioned above, self-reporting payment companies exist that allow individuals to outline their payments to landlords, rent to own purchases and monthly utility bills. These are often overlooked and not reported by the companies who process payments, but the credit bureaus in question will count these if they are in fact reported. There are also standalone solutions such as Payment Report Build Credit that can furnish a separate copy of a credit report for these particular payments. While not as influential as the big three credit bureaus, it can come in handy with select loans from financial institutions and help to improve your overall credit score.
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