Making credit card payments is one of the major ways people can establish a credit score, but it's not the only way. Building credit can be tricky. If you don’t have a credit history, it’s hard to get a loan, a credit card or even an apartment. But how are you supposed to show a history of responsible repayment if no one will give you credit in the first place?

In many cases, credit cards offer the quickest path to improved financial standing, but what if your current score isn’t high enough to qualify for a card?

Having less-than-ideal credit happens. In fact, just over 40 percent of Americans have a FICO credit score under 700.

• vSeveral tools can help you establish a credit history:

• ØIf your aim is to get a credit card, you could start with a secured credit card or co-signed card, or ask to be an authorized user on another person’s card.
• ØIf you want to build credit without a credit card, you might try a credit-builder loan, secured loan or co-signed loan. There are also ways to use rent, phone and utility payments to build credit. Some of these ways are free, others carry a fee.

Can You Have A Credit Score Without Having A Credit Card?

Yes, you can establish credit and have a credit score without a credit card .If you do not want to commit to a credit card; there are other methods for establishing and building your credit score. Contact your utilities or loan companies to find out if your payment history is being reported to the three credit reporting bureaus, Experian^®, Equifax^®, and Transunion^®. Consistent and on-time payments toward federal student loans can improve your credit score, which is important for future loans and credit card applications. Some rent and utility companies also report on your payment history, so it is worth understanding which ones do so you can avoid late payments that could negatively impact your score.

When it comes to building up your credit score, cards aren’t your only option. Although credit reporting agencies often use credit card purchases and payments to evaluate your creditworthiness, this approach isn’t exclusive to cards.

If you are making payments on time and keeping your debt-to-credit ratio low i.e. below 30 percent, ideally you can build up enough credit to qualify for the card you want.

Some Other Key Considerations in Credit Card Utilization

It’s also worth noting that no matter how you choose to build credit such as by getting a personal loan, a secured card or becoming an authorized user your success depends on three key factors which are given below ;

[A.] Make payments on time:-Ensuring your payments are always on-time is the best way to boost your credit. Since your payment history makes up 35 percent of your credit score, it is crucial to pay your bills on time. Not only do you avoid any cash penalties or APR increases, but you show the pattern of financial consistency that credit agencies want to see.

[B.] Manage your debt-to-credit ratio:-Your credit utilization is the ratio of your total credit to your total debt, and it is generally a good idea to keep your credit utilization below 30 percent. The higher this ratio, the slower you’ll build credit. For example, if you have a secured card with a $1,000 limit and a $300 balance, your debt-to-credit ratio is 30 percent. Less than 10 percent is ideal and more than 50 percent makes it difficult to establish a good credit score.

[C.] Maximize your credit history:-Lenders rely on your credit history as a glimpse into what kind of borrower you are. It functions a lot like a report card. The longer your history of making payments on time and keeping your debt under control, the better your credit score. If you’re just starting to build credit or are recovering from recent financial difficulties, however, your history is often limited. Help jump-start your credit score by reporting as much data as possible from rent and student loan payments to vehicle and personal loan details.

Conclusion

By making on-time payments, keeping an eye on your debt-to-credit ratio and considering options such as taking out a credit-builder or personal loan, reporting alternative credit data or applying for a secured credit card option, you can get your credit rating back on track.

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