There’s no doubt that having a good credit history is great, especially if you want to access any financial products, like low-interest mortgages or car loans. And the list of benefits doesn’t end here, as your overall credit history can have an impact on your insurance rates, rental opportunities, and even the chances of getting a good job.
In order to build credit, most people rely on loan repayments. Specifically, we’re talking about mortgages, student loans, or credit cards, all of these being able to prove that you’re good for the money you are borrowing.
And, as a side note, credit cards remain one of the best options for putting that score together. But what happens if you don’t have one and need to start from scratch?
No worries, there are some methods you can use to build credit even without no history at all!
Opt for a credit-builder loan
This type of loan is unique, as it can help you build credit without owning a credit card. Basically, instead of strengthening your credit history by borrowing and spending money, you simply strengthen it by saving something.
Simply put, your financial institution of choice deposits the loan money and you make monthly payments until everything is paid off. You can’t access the deposit until you’ve paid the sum in full and, once you are finished, you will have a good credit history, as well as a decent amount of savings!
The downside is that you will probably need to pay interest and, probably, an application fee.
Try an auto loan
Looking forward to changing your car? A car loan could be another great way to build credit, even without owning a credit card. There are quite a lot of affordable options out there and you won’t end up with a new ride, but also with good credit history.
On the other hand, you should know that presuming you have a poor credit score, it’s very likely to get an unfavorable interest rate. However, in the end, it helps you build credit and this counts a lot, despite the minuses!
Apply for a student loan
Finally, let’s not forget about one of the most popular methods of building credit score which, for a lot of people, seems scary: a student loan.
If you’re heading to college, chances are you will apply for a student loan. As long as you don’t have a scholarship or planning to work during your studies, this could be an opportunity to build some serious score, even without a credit card.
So, which one of these sounds tempting to you?