Want to prove your creditworthiness? No doubt, a clean credit card payment history can do that at a finger snap. But what if you are a novice with no credit cards? What if you don’t want to have credit cards? Will you not be able to build credit? Relax those frayed nerves. You can still prove your credence.
There are other ways that depict your trustworthiness. Check these out here:
Have a Spotless Bill Repayment Record
If you are someone who never misses the due date for your bills, building creditworthiness won’t be a hard row to hoe. Your payment pattern can easily be judged by looking at your bill repayment history. Avoid inviting unwanted penalties. Also, your Annual percentage Rate (APR) can increase because of late payments. It’s a no-no!
Checking Accounts in Neighboring Banks
Lenders seem to observe bank accounts as a sign of stability. Banks accounts do not need credit to open. So opening a checking account in your neighboring branch can work out in your favor.
By doing so you are sending out an affirmative message to the lender that you have the capability to handle money. In addition to this, if you retain a positive relation with the bank your chances of getting the credit accepted are high.
Do Not Keep Switching Jobs Frequently
A clean service history increases your probability of getting credit permitted faster. Some lenders do look into your work constancy and your steadiness to hold on to jobs. If you are switching jobs very often, people smell something’s fishy.
Make Rental Payments? Report
If you haven’t been reporting your rental payments yet, this is your call. Start doing it now.
It acts as a catalyst to improve your credit score. In fact it can make a difference of 25-30 points in your score. But here are two important things that you should know:
- You cannot report your rental payments directly. Ask your landlord to report it to the agency.
(Pro tip: Do maintain good relations with your landlords. They hardly report rent so it can involve a little bit of convincing!)
- Rental payments are not directly taken into account for calculating your FICO score (3-digit scores that help lenders take their borrowing decision)
Personal and Car Loans Are Your Opportunity
What better than taking a personal loan or a car loan, repaying it on time and then proving your competency to handle credit? These loans are installment based and weave your payment pattern over a period of time.
Make sure you:
- Pay your personal loan as per terms and conditions.
- Choose APR that is easy for you to pay when it comes to car loans.
- Don’t miss due dates consistently.
Peer-To-Peer Lenders Can Be Your Savior
Want to eliminate middlemen? Try peer-to-peer lenders. It is now a popular method of financing. A number of lending websites offer P2P lending.
Here are some steps to secure a P2P loan,
- Make your financial profile on a lending website.
- Lenders will keep bidding after reviewing your profiles.
- You can choose from a number of offers and proceed.
The rates in some cases may be higher than what are charged in traditional financing.
Also, ensure that these sites report to credit agencies. If you have issues getting this type of loan you can find other person with a high credit score to vouch for you. Sounds good? Try!
Get Secured Cards
You can make use of credit like a secured card. A secured card can be obtained by creating a deposit with the credit union or the issuing bank. The deposit here works as a collateral. The amount of deposit you make will serve as the ground for issuing credit. A $500 deposit will unlock a credit for $500 and so on.
So the process is similar to that of a prepaid card. But you have to make sure that the lender reports to all the three credit agencies and the former should rather be a bank or a credit union only.
Are the Previous Loans Paid? Please Do
If you have any previous loans say for example a student loan, pay it right away. This again builds trust. The lender catches he can count on you.
Store Credit Accounts Can Be Your Friends
Just like credit cards are a system of revolving credit, so are store credit accounts. A number of stores give you this option. Purchases can be made against the credit limit of your store credit. Here again, make sure that the owner is reporting to credit agencies. Only then will you be able to reap the benefits if this store credit account.
Maintain a Good Debt-To-Credit Ratio
The ratio of your total credit to your total debt is your debt-to-credit ratio. This ratio is taken into account while calculating your credit score. So it is important to maintain your debt-to-credit ratio mindfully.
Higher the debt-to-credit ratio, lower will be your credit rating. Ideal debt-to-credit ratio is believed to be lower than 30%.
So? If all along you kept wondering that only plastic credit money could help you build a rapport in front of the lenders, this article brings good news. All the above-mentioned ways will make you an easy bet for lending credit. Maintain a good credit report card and bring that credit rating on track. Once you do, maintain it.
Happy credit building!