Building your credit up and working towards a great credit score is highly advisable if you want to have a secure financial future. Having access to lower interest rates and better mortgage or loan offers is extremely helpful while navigating life. If you want to build your credit score but you do not currently have a credit card, there are a few ways to go about doing so regardless of your age and any current credit score you have earned. With a commitment to better management of your finances and the right plan, build your credit as quickly as possible even without a credit card to your name.
Become an Authorized User on Someone Else’s Credit Card
One of the quickest ways to boost your credit without having a credit card is to become an authorized user on another individual’s card. When you become authorized on another person’s credit card, you begin receiving credit immediately for purchases and each time the bill for the credit card is paid on time. In some cases, it may also be possible to immediately build credit simply for being placed as an authorized user on a credit card, even if you were not involved in past purchases made with the card itself.
Before you ask a friend, family member, or loved one to place you as an authorized user on their credit card, it is important to confirm that the individual:
- Currently has a good credit score with no outstanding balances owed on the card.
- Always makes their payments on time and rarely pays late or with a fee involved.
- Does not have a history of financial trouble or issues arising due to poor credit.
Pay Bills on Time
It is imperative to pay all of your bills on time when you are attempting to build credit without a credit card to your name. Paying bills on time that are using your name and social security number helps to keep your credit score in good standing. When you do not pay your bills on time or if you simply stop paying your bills altogether, your account will likely be reported and your credit score will decrease.
Having hits on your credit score due to paying bills late or not paying them at all can severely hinder your ability to build your credit and receive the approval you are seeking for a credit card in the future.
Apply for a Secured Credit Card
Another way to boost your credit score if you do not have a well-known credit card in your name is to apply for a secured credit card. A secured credit card is a great solution for individuals who want to build your credit but have no way of doing so due to a lack of credit and financial experience.
With a secured credit card, you are required to deposit a set amount ranging from $250 to more than $1000, depending on the secured credit card you choose. Once you have secured the amount of your choice on the secured card, you can then use the card to help build your credit. Reloading your secured credit card helps to maintain your spending balance while also boosting your credit as it proves you are becoming fiscally responsible and self-aware.
If you are already attending university or have plans to enroll in college, your federal student loans can help you to build your credit without a credit card. Once you have a loan in your name, simply paying it off on time and within a timely manner can help you to boost your overall credit score. However, it is important to avoid applying for a federal or student loan for the sole purpose of building your current credit score, as there are much easier alternatives available.
Some loan offices and banks may offer credit-building loans. A credit-building loan requires you to pay off a loan you are interested in taking out ahead of time. Once you have paid off the loan you desire with interest, you will then receive the funds you need while also building your overall credit score with each payment you make.
Knowing how to build credit without a credit card is essential whether you are just turning 18 or if you are looking to work on your financial stability. By building credit slowly and responsibly, quickly gain access to a variety of credit cards and loans with interest rates that are appealing and affordable for you.