Establishing Credit without Credit Cards
Two Ways to Establish Good Credit without a Credit Card
When establishing or improving credit, consumers –especially young people- tend to head straight for the credit card option. But what if you don’t want a credit card? Have no fear. There are several legitimate, creative ways to get around the path constantly tread.
Co-sign
Co-signing on a loan or car payment with someone with good credit is the easiest way to improve your credit. It is also the riskiest. If you cosign on someone’s loan and you miss a payment, you will bring down not only your credit rating, but their credit rating. Considering most people cosign with a loved one or friend, it may also put a large blow in your relationship. If you cosign, start small. Rather than something as large as a mortgage, start with something like a small loan.
PRBC
Pay Rent Build Credit is a Fair Credit Reporting Act compliant, alternate credit bureau credit. It was created with the purpose of creating credit history for those lacking in a traditional credit history. The company uses the FICO Expansion Score to offer their PRBC report. The FICO Expansion Score is a rating system based on a consumer’s history of paying rent and other recurring bills, on time. All you have to do is submit your information into a Web file. The fee is $15 to $20 for verification, or set up an automatic bill-payment system through your financial institution and have the records sent to PRBC.
Secured Credit Card
If you decide that you really want a credit card, you may want to consider getting a secured card. A secured card is similar to a prepaid credit card, with essential differences. A prepaid card does not affect your credit. A secured card does. A prepaid card you can put $1000 on the card and use that exact amount. A secured card uses some of that money towards a deposit, in case you go over your limit. If you put $1000 down, you may only have a $500 limit. If you go over that limit then the money will be used from your security deposit. Prepaid cards can be issued to minors. Secured cards cannot.
Building credit is a very sensitive matter that must be addressed with careful thought and strategy. Make sure you know all the strategies necessary to get ahead and become a smarter consumer.
- Understanding Credit:
