Good Credit Without A Credit Card
The number of Americans using credit cards has fallen significantly in the last few years. Many people don’t trust themselves to effectively manage credit cards and are afraid of acquiring excessive debt. It is important to keep a good credit score for several reasons. First, a good credit score can allow you to borrow money in an emergency situation. With a good credit score you can secure a low rate on a loan just in case you need to obtain a short term loan. But credit is used for more than getting loan. Insurance providers, cell phone companies, and even some land lords actually use credit when evaluating applicants. Here are a few tips on how to keep a good credit score without a credit card.
Get A Personal Loan
The best way to build credit without getting a credit card is to get a personal loan. Personal loans come in several types. If you have no credit score or a low credit score, a secured loan might be best for you. A secured loan is a loan granted with money you have deposited used as collateral. The interest rate on these loans is usually a little more than the interest you earn on the money. Secure loans can sometimes be obtained more easily from credit unions than banks because they are usually willing to look beyond a credit score. Secured loans are not very risky for lending institutions so they are easy to get but only give a moderate boost to your credit.
Unsecured loans are particularly good for your credit. Unlike a secure loan, an unsecured loan has no money as collateral. If you default on an unsecured loan a lender has few options available to recover their money. As a result, interest rates on these loans can be very high and they will often be for smaller amounts of money. Because these loans require lenders to put themselves at risk, successful repayment of these loans shows creditors that you are trustworthy and resultantly boost your credit.
It is important to remember that any type of loan only helps your credit score as long as it is active. Once a loan is paid off, it stops building your credit score and its positive influence on your credit begins to diminish as time passes. Credit score calculations prefer that you have at least one account open, so if you have no active accounts your credit score will begin to suffer.
Get A Student Loan
This option is not available to everyone, but a student loan is a great opportunity to build credit. Student loans can often be obtained at a very low interest rate and usually come with conditions that help the borrower pay them back at a low price. Stafford loans, a widely available student loan, can be taken out without any proof of financial need at the low interest rate of 6.8%. Student loans will not usually benefit your credit, however, until you begin repaying them.
Get On Someone Else’s Card
If you have a family member who will add you as a user on their card, then you can begin building credit without a card of your own. This situation requires that you have a family member with a credit card who is willing to add you as a user, so it is a significant risk to them because there is nothing to stop you from exceeding their credit limit. While it is risky for the holder of the card, becoming an authorized user on someone else’s card is a way to develop high credit. This option, while not useful for everyone, is a way to develop credit if you are struggling to get a credit card or a loan.
Credit is important, even if you don’t think you will need it in the near future. There are ways to develop credit without the risk of a credit card. There are more options than these that you can find through your own research. Always keep your personal situation in mind when deciding how to build your credit.
Let’s say that your car broke down and you absolutely have to get to work on Monday. Your kids need a ride to school and you have to drive to work. How do you go about getting your hands on some fast cash? Or, let’s say that your child broke her tooth and needs emergency dental care. How do you pay for it? Most of us have “maxed out” our credit cards and have no equity in our homes to borrow against, so for us, the easiest way to get fast personal loans is through payday cash advances.
There are many reasons why people want to get a personal loan, but most of them are brought on by some kind of emergency. With the price of healthcare in our country, it should come as no surprise that most Americans who go into bankruptcy do so because of a health-related incident in their family’s life. For those of us who have problems that are not quite that bad, health-related issues can still cost an arm and a leg and get us into financial trouble. It is in times like these that a personal loan can come in very handy.
If you have tried to get a mortgage at any time in the past two years, you know by now that it is an extended process that involves delivering copies of years of tax filings to your bank, proving your employment and salary, and even proving your own identity over and over again. If you are looking for a quick personal loan, then your local bank probably isn’t going to be your first stop. They got in such trouble by giving out loans to people who didn’t deserve them that they have now tightened up their purse strings so much that even the best credit risk can’t get one.
You know when it is time to get a loan. You can’t sleep at night because you are so stressed out, or you are getting no sleep because you are working two full-time jobs, just to pay the bills. Whatever the reason you are in debt, getting out of it can sometimes be very difficult. The fact that we are in the worst economic mess that our nation has seen in almost a half century doesn’t help matters any. If you are looking for a way to pay off debts, then you may be considering getting a loan. But, how do you choose the best personal loans?
The stock market may be making a move to the upside, but that certainly doesn’t mean that we are out of the dark. Most people don’t reap the benefits of a good stock market until much later. House prices are still depressed, most of us are locked into high rates of interest on our credit cards, and our salaries certainly aren’t going up at the rate of inflation. So, now is a great time to apply for personal loan funds, especially since new loans have an affordable interest rate.