How to Build Credit Without Credit Cards

Let's face it - beginning the journey to build credit can be a tricky one, but it is very important to do so. Credit impacts small purchases, such as cell phones; to major life decisions like applying for a mortgage. Due to the economy, building credit is now more difficult than ever. If getting approval for a credit card is not the ideal way to go for you, then try these ideas on how to build credit without having to use one.

Difficulty: Moderate

Instructions

1. Check with your local bank about establishing a savings or checking account. This is the most basic step, especially for young adults. Having a savings or checking account is the first major step in building credit history, as it teaches people how to manage their money. Some lenders will take note of an established savings or checking out as a sign of financial stability.

2. 
    
   Make sure you record all bill payments in order to gain credit.

   Build your own payment history by submitting your payment records. If you are paying monthly bills on time, you can submit records of your payments to Payment Reporting Builds Credit, which is a credit reporting bureau. They will charge a setup fee to verify your records, but once that is done, you can submit payment data such as rent, utilities, and cable bills. This payment history can then be used for any potential credit or loans in the future.

3. Apply for a secured credit card instead of a regular credit card. A secured credit card is basically a credit card that requires you to make a monetary deposit equal to the card's credit limit. If you make payments on time over a period of a year or two, you most likely will be able to convert it to a card with better terms. A link has been provided in the resources section to do a search on secured credit cards.

Tips & Warnings

• If applying for a secured credit card, make sure that they report your credit to the qualified credit bureaus.
• Secured credit cards come with high interest rates and annual fee. Do your research to find a card with minimum additional charges.
• Having credit is not a right, it is a privilege. Make sure you handle your finances correctly!

Resources

• Payment Reporting Builds Credit Website
• Bankrate Credit Card Search

[xivyisazombiex]

on 12/19/2009 Great suggestions.