build credit historyWhenever anyone sets forth on a credit-building journey, they are undoubtedly given the same piece of advice: open a credit card account. This lesson is repeated over and over again because it’s one of the simplest steps an individual can take to begin establishing their credit history. However, there are plenty of people who may wish to avoid opening a credit card in their name. Luckily, there are plenty of strategies these individuals may employ to establish a good credit rating despite skipping this step.

Credit Building Loans

Community banks and small financial institutions will sometimes offer their customers small loans intended to build credit. Typically, the money you borrow tis immediately put into an account controlled by the lender. You’re locked out of access to these funds until you have fully repaid the loan. Because of this safety-net, banks are willing to give credit-building loans to consumers with very low credit scores. You can even get this type of loan if you have zero credit history.

Unfortunately, the service isn’t free. As with all loans, the financial institution will charge you interest. Therefore, it’s generally best for you to pay down the loan as quickly as possible. The only exception is if the contract contains an “early repayment fee”. Go over the terms of your loan carefully to see if such a clause exists. If it does, you should weigh the cost of interest over the entire term of your loan versus the fee.

Make Use of Student Loans

If you are one of the 40 million Americans with a student loan, you may already have a credit file and not even know it. Student loans appear on a person’s credit history just like any other type of loan. As long as you make your monthly payments on time, your credit score will improve over time.

Anyone who is struggling to make their monthly student loan payments should consider applying for a deferment. This is sometimes referred to as ‘student loan forbearance’. Doing so will not damage your credit score, as it simply freezes your payments until a later date. This is highly preferably to missing a payment. A single missed bill can tarnish your credit history for up to seven years.

Become An Authorized User

You can always attach your name to a credit card account of a family member or significant other. Most of the major issuers report authorized users to the credit bureaus, which means it will help establish your credit score. The account and its age will appear on your credit report with very little risk to you. This is because the main account holder is the one responsible for all debt obligations on the card. The authorized user’s score will not fall even if the main credit card user fails to pay a bill or declares bankruptcy.

Before signing on, double check that the bank reports authorized users to at least one of the three credit bureaus – Experian, Equifax, or TransUnion. Some small institutions have internal policies that allow them to only report the authorized user if they are a spouse. You’ll want to double check what your bank’s policy is before pursuing this strategy for credit building.

Use A Service That Reports Rent Payments To Credit Bureaus

In recent years, there’s been a surge of companies that facilitate the reporting of timely housing payments to reporting agencies. People who are always on-time with their monthly rent payments should certainly take advantage of such services to boost their score. The most challenging part of this is getting the support of your landlord. He or she will need to supply some proof or sworn statement of your rent payments. However, as competition in this field grows, even this process is becoming automated making it easier for both the landlord and the tenant.

As you shop around for these services, you may see they are sponsored or partnered with a single credit bureau. This shouldn’t alarm you. Once one credit agency puts in information into their database, it is usually shared across the other two. For example, if TransUnion receives access to a database that shows you have been paying rent, other credit bureaus can just as easily get the same information.

Article originally appeared on ValuePenguin

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