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How To Build a Credit Score Without a Credit Card?

You need a home loan. You want to bring home a new car, set up a utility account, obtain a cell phone, rent an apartment, or perform any other transaction. You need to have a healthy credit history. By raising your CIBIL score you can avoid expensive terms. Most importantly, you can avoid the worst-case scenario, loan or credit card application rejection. Credit card affects credit score but only a small part of it. However, it does not mean that you can put credit cards on the back burner. Let’s break down the Credit Score.

  • Payment History – 35%
  • Credit Utilization – 30%
  • Length of credit history or account age – 15%
  • Hard inquiries/new accounts – 10%
  • Type of credit used/credit mix – 10%

Establishing a good history of timely payments and keeping credit utilization low are the two most important factors that can improve your credit score.    

There are some individuals who don’t want to obtain a credit card or can’t obtain one. These individuals can also build credit using other ways.    

How to raise my credit score?

If you are looking for the answer to this question, we’ve got the solution for you.   

Pay your old bills

You have an old student loan. However, the age of the account and years of timely payment, will increase your credit score. Don’t miss payments. Don’t miss late payments. Also, pay off collection accounts.  

Report your rent

If you have subprime or unscorable credit, you can report your rental payments. The credit bureau conducted a study and found that consumers with “thin” credit files can add rental history. This will make the credit scorable. This will also jump to the credit category. In the same study, it is also found that the credit score of customers already having a credit score is increased by an average 29 points after reporting rent.                 

65% of the credit score is based on account age and payment history. So, when you are making timely mortgage payments, you are scoring both types of points.     

Customers with responsible rent history have remained at a disadvantage. If your rental history is providing only a little or no credit at all, collections and evictions can cause significant damage.

However, the majority of credit reporting agencies are now including rent payments in credit files. Although it is not a factor in FICO, it is a part of a specialty credit report made available to landlords. However, it is a factor in VantageScore. Keep in mind that the landlord or the property manager can report to the credit agency. The tenant will have to work with a third-party rent reporter to report to a credit agency. 

Open a Store Credit Account

Most of the credit accounts offered by stores are reported as revolving credit. This is just like a credit card. You can get credit accounts from local home improvement stores. However, make sure that the issuer reports to the credit bureaus. These credit accounts can also help in recovering from poor credit.

Take a loan

Borrow some money and pay it back on time. Show credit agencies that you can handle the loan responsibly. Get a small personal loan from your bank. If you are unable to get a loan from a bank then you can go to peer-to-peer lenders. The approval rate is high and these lenders report to the credit bureaus.      

Keep your job

Employment is not a credit score contributing factor. However, it goes to your credit file. Creditors check for stable employment history. This can improve the approval rate.

By following these steps, one can easily boost their credit or cibil score and then can easily can credit cards on loans at the most affordable rates.

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