We all realize just how important it is to have a credit score that is going to showcase to lenders that you are a worthy recipient of credit. This credit score can also have an impact on the interest rates that you are paying, as well as the quotes you get for insurance. With this being said, many people look for ways to build credit that is going to help them get a better credit rating in a limited amount of time. The good news is that there are several methods that can be utilized to build your credit in a way that is going to ensure that you are able to get credit and get better terms for these credit offers.
There are methods that everyone has heard of that are still applicable to those who are searching for ways to build credit. These methods include:
- Paying your bills on time
- Utilize only a small amount of your credit so that you showcase that you can handle credit
- Not applying for credit all the time, as this can have a negative effect on your credit
These are the tried and true methods that everyone knows about. But, there are other ways to build credit that most people do not think about, that can have a great reaction to your credit score.
Get Credit for your Rent
One of the methods that most people are not realizing about their rental payments, is that these can be reported to credit agencies, and this becomes a legitimate way to build a credit score. This is especially important for those who may not have a credit card, but do have a rental payment. However, there are a few aspects to keep in mind with this option:
- Reporting rental payments is relatively new, thus not all landlords are doing this, it has only been used by Experian since 2011
- You can utilize a third party website to pay your rent that will report this payment for you
- The information that is reported to the credit bureau includes if you paid on time or are late
- Luckily, most of these third party websites will check with the landlord first before reporting that you were late on a payment
This can be a great method in when using ways to build credit that you are going to be doing on a monthly basis. Credit bureaus may see this as a decision that shows you are responsible with your money and do pay your bills on time.
Get a Loan for Building Credit
When most people think about building up their credit score, the idea of getting a loan just for this is not one that they consider. This is due to the person believing that they have such a low score that no one give them a loan. However, times are changing as many lenders have loans that are there specifically to help the person build their credit. A few aspects about these loans:
- They are usually in small amounts as they are meant to be a way for you to showcase that you can pay your bills on time
- In most cases, the funds are put into an account, thus you do not have access to these funds
- After paying off the loan, you are given the funds, plus the interest that the account has earned
- Be aware of those loans that are given by payday lenders, as they may not be the type of loan that you are really wanting, and can have a much higher interest rate
These loans are reported by the credit union to the credit bureaus and will serve as a legitimate method for ensuring your credit is becoming more positive.
Reporting your own Information to the Bureaus
Credit bureaus are getting their information from credit card companies and other lenders. Chances are, the payments you make to the electric, gas or water company are not reported. Yet, these are ways to showcase that you are responsible with funds and your credit. That is why many professionals recommend that you self-report bills that you pay on time as one of the out of the box ways to build credit. There are third party websites in which you can utilize that are going to report this information for you. However, keep these aspects in mind:
- If you do not pay on time, or are frequently late on payments, then signing up to disclose this information could hurt you more in the long run
- This is a slow process of building up credit, but it can work eventually
If you are looking for ways to build credit that does not involve credit cards and the like, then these methods can work for you. They are considered abnormal ways to build credit, but it can work, especially for those who may be struggling to show that they are a good credit customer.