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If you are prepared for the realities of credit card management, those little plastic cards can open the doors to an excellent credit score. If you are not, however, credit cards can have the opposite effect. Thankfully, there are ways you can improve your credit score without having to hold, use and manage credit cards. Here are four smart methods you can use to build your credit without plastic.
Your ability to make on-time payments each and every month has a huge impact on your credit score. With 1/3 of your credit score dependent on this metric, any missed payments at all and your score could hit rock bottom. To ensure you never miss a payment, set up automatic payments through your bank or other bill processing company. Credit improvements for on-time payments happen gradually, but you will save on late fees in the meantime.
If you want to save for big purchases, and build your credit at the same time, you can open a secured line of credit from a trusted lender. This type of loan utilizes your own assets to create a revolving account that builds your credit standing. As you use and repay the funds in the loan account, your credit score will slowly improve much the same as it would with unsecured credit lines and cards.
If you do not have the funds for a secured line of credit, you can open a small unsecured line of credit of a few hundred dollars and only use it for small purchases. Only purchase items that you already have the cash in hand for and immediately pay off the loan after the payment processes. By taking this approach, you can build your credit without running the risk of falling into serious debt.
Although unconventional, you can report your on-time rent payments to the credit bureau to build your score. The rent payment reports show when your payment arrives against when it is due. You must be certain that you can make your rent payments on time each month before initiating this process. The on-time rent payments will help bump up your credit score over time, but only if the system shows zero late payments.
With these smart methods on your side, you can build your credit without having to manage credit card accounts. Your efforts will help improve your financial health without the risks.