When the term “credit” is discussed, it’s natural for many people to think of a physical credit card first. And while this is absolutely one of the primary ways credit is built and maintained over time, it’s important to realize that there are other methods of building and maintaining credit, and attention to these is often just as important as the time you spend on your various cards.
At Diversified Members Credit Union, we’re proud to offer a wide variety of services that will involve credit to some degree, from personal loans and numerous other loan types up through retirement planning and more. Whether you’re unable to qualify for the card you want or simply are looking to diversify your credit portfolio, here are some other ways you can build credit beyond the use of a credit card.
Did you realize that simply making on-time rent payments can result in positive marks on your credit history? This is because rental property management companies report these payments to the major credit reporting bureaus.
Even if you have a private landlord who does not make these reports, you can reach out to credit bureaus yourself to have them start reporting your timely rental payments to help build credit. Be sure to never miss a payment if going this route, as having late or missed payments on your credit history will negatively impact your score.
You may have several potential types of debt outside your actual credit cards, and paying these on time helps build up your credit. For example, installment loans such as mortgages and student loans can be reported to the major credit reporting bureaus and having them paid timely will help to show lenders that you are a responsible borrower.
Debt consolidation or payoff is another possibility here. If you have several smaller debts that need to be paid, you may be able to build credit by creating one larger debt that can then be reported and repaid on time. This strategy is often used by people who have already built up a good credit history but are now looking to buy a home or vehicle where income needs to be proven.
There are a few types of loans you may consider specifically to help build your credit, including both personal loans and a few other types. As long as you know you can make on-time payments, these loans can help you build credit quickly.
Personal loans are a common choice here, though you may need a co-signer depending on the state of your credit. There are also other loans designed specifically to help build credit, involving collateral held until the loan is paid off.