Building a Strong Credit History Without Using Credit Cards


    Although many people turn to credit cards to help them build credit, there are other tools individuals can use to improve their credit scores. Since some people have trouble managing credit card debt and do not want to pay high-interest rates, they often turn to alternatives to help them build a solid credit history. Here are a few of those alternatives.

    Loans to Help Build Credit
    Some banks and credit unions will offer their members what are known as credit builder loans. The loan amounts are typically lower than $1,000, and the credit union or bank will put the money in an interest-bearing account. After making a certain number of payments, borrowers can then access the funds. The goal is to pay off the loan before the maturity date.

    Peer-to-Peer Lending
    Instead of going through a traditional financial institution, borrowers can apply for loans offered by individual investors. Known as peer-to-peer loans, consumers can apply using a reputable P2P lending website or service. The loans typically offer reasonable interest rates, and this type of financing is completely legitimate.

    Paying Rent on Time
    Although many individual landlords do not report on-time payments, many property management companies do report timely payments. There are several online payment services in existence, which allows renters to pay their monthly rent electronically. When payments are made, the rent activity is reported to one of the three most recognized credit bureaus in the United States, TransUnion, Experian and Equifax.

    The proven way to build a solid credit history is to make every payment on time. By not making timely payments, consumers severely damage their credit scores. A missed payment can drop a credit score by 50 to 100 points, depending on the type of account. Additionally, consumers should check their credit reports at least once a year through the free website

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