Have you ever applied for an apartment and had your application declined? Are your car-insurance rates higher than what your friends pay? Or has a cellphone company ever taken a pass at signing you up for a money-saving deal? If so, the problem might be your credit score.

More and more, companies turn to your credit report for proof that you are financially responsible and pay your debts on time. If you have a solid credit history and a high accompanying credit score, you may qualify for the best financing deals on the market, including home or car loans with low interest rates that can save you hundreds of dollars every year.

And because employers, landlords and property managers sometimes run credit checks when you apply for a job or an apartment, a weak credit profile could hurt your chances of getting a new job or moving into a new home.

Why You Might Have a Low Credit Score

If you are a young student or new to the country, you probably have not had much time to establish a strong history of borrowing money responsibly and paying your bills on time. This means that, over the course of months or years, you will need to build a credit record from scratch.

On the other hand, maybe you are not so young and not new to credit, but you have fallen on hard times that have damaged your score. In this case, you may need to repair bad credit history and rebuild your profile as quickly as you can.

What is one excellent way to establish credit? By demonstrating a long record of paying off a credit-card bill on time. But you may be wondering, “How can I build my credit without a credit card?”

Why You Might Not Have a Credit Card

Imagine this scenario: You apply for a credit card from your bank. To qualify, says the bank, you need a credit history. But how can you develop a credit history without a credit card to develop this history? The bank declines your application, and you walk away without a card.

Or maybe you worry about overspending and even falling into serious debt. Some people see credit cards as a danger that is best avoided.

Whether qualifying for a card is an issue or you prefer not to have one, let us explore how to increase your credit score without a credit card.

5 Ways to Build Your Credit Without a Credit Card

Anyone can build credit for free, though not necessarily as fast as you may like. Increasing your credit score takes six months or longer. For a credit bureau (such as Equifax or TransUnion) to give your report a high score, you need to have a long record of responsible borrowing—and not just using a credit card. If you can get your hands on them, it is best to have multiple types of loans on your credit report. These might range from lines of credit, to car loans, to mortgages—as long as you pay off your debts on them reliably.

Here are 5 ways you can raise your credit score, qualify for better opportunities, and build your wealth by taking advantage of the lowest-possible interest rates.

1. Cultivate Good Payment Habits

Our best advice for building good credit? Pay every bill on time, plain and simple. When your phone bill arrives, pay it within 30 days of its due date. That goes for all your monthly services—for example, your utilities, cable and Internet.

Defaulting on your bills or having them sent to collections is a recipe for regret. Bad accounts will stain your credit report for six to seven years.

Reduce your debt, and your credit score should rise. If you are carrying a lot of high-interest debt, consider paying it off with a low-interest personal loan.

2. Get a Credit Card Alternative

If you do not qualify for a regular credit card, you might temporarily use a secured credit card. You will pay an up-front cash deposit, which usually becomes your credit limit and which will cover any payment defaults you make. After a period of time or when you close the account, you will get your deposit back. Be sure your secured credit card account will report your payments to the credit bureaus.

If you are in school, you might check whether your bank offers student credit cards. Ideal for younger people managing their finances for the first time, these cards often come with smaller credit limits and lower introductory interest rates. Be sure your payments will get reported to the credit bureaus.

3. Find a Loan You Can Qualify For

If you have no or little credit, why not apply for a credit-builder loan? These are special loans designed to help people build credit. Let us say you “borrow” $1,000. Instead of giving you this amount, your lender will lock it away and release it to you only once you have paid the full amount. Your payment will get reported to the credit bureaus.

You might also consider a secured loan, which is backed by an asset you own, such as cash, property or your vehicle. Be sure your payments will get reflected in your credit file.

4. Earn Credit for Your Rent Payments

Do you pay your rent on time every month? Your diligence should be rewarded! With the Landlord Credit Bureau, your on-time rent payments will now increase your credit score

If you are a tenant, your biggest monthly expense is probably your rent. When your landlord reports your rent payments to Equifax through the Landlord Credit Bureau, you can watch your credit score grow over time.

A high credit score will help you if you are saving to buy your own home, if you move, or if you want to upgrade to a nicer rental unit. With the Landlord Credit Bureau, you will also benefit from building a positive tenant history. Future landlords will be able to access your file for proof that you are a punctual rent-payer who takes good care of your unit.

5. Keep an Eye on Your Credit Report

There are two reasons to monitor your credit report and score. One is to satisfy yourself that your hard credit-building work is paying off. The other is to check for errors or even fraud.

You can get a free copy of your credit report (in the United States or Canada) and sign up for free credit monitoring services such as Borrowell, which works with Equifax. Check your report and score at least once a year, and dispute any mistakes you catch.

Are you ready to improve your credit, build a positive tenant record, skip the line and get the rental unit or home you deserve? Sign up today to report your on-time rent payments.

Disclaimer

The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

In October 2021, the LCB organization re-branded some of the services it offers under FrontLobby. Until this point, the LCB organization has consisted of two companies handling different services under the umbrella trademark of Landlord Credit Bureau. The introduction of FrontLobby enables each company to maximize its focus and impact. Read More