It’s not easy to establish and maintain an excellent credit score. When the rating gets low, improvement requires lots of work and time. Although using credit cards prudently is a superb option to improve your credit rating, it’s not the only option. There are many other methods to boost the score of your credit. Learn more about the five ways to establish an impressive credit score without having a credit card. Before we start, let’s look at a credit score and credit report.
Credit Score & Credit Report
Credit Score:
The credit score is a three-number that summarizes your credit score. It is a sign of your creditworthiness. Your credit score and your payment history determine your credit score. The lenders consider your previous repayment history a reliable indication of your repayment ability. Credit score plays a crucial role in obtaining credit card and loan approval. This is particularly relevant for loans that aren’t secured and credit cards, as they do not have assets or collateral that can block them.
Credit Report:
Credit bureaus monitor the actions of their clients on their credit reports. They give a range of 300 to 900, the credit score. What goes on in your report on credit is crucial. Any credit actions that are not reported that can boost your credit score, as well as mistakes that may result in a decline should be fixed immediately.
Here are 5 Key Ways to Build A Strong Credit Score Without A Credit Card
: #1 Take Out a Small Loan at a Bank or an NBFC.
If you have a great relationship with the bank or NBFC or NBFC, you can take out a loan through your bank or NBFC. The amount you borrow will depend on your ability to repay. Repaying this small loan will improve your credit score, but make sure you pay on time. If you do not make repayments, it can affect your credit rating.
#2 Ask Someone To Add You As An Authorized User
If you know someone, you could ask them to include you as a user authorized by them. By doing this, you’ll benefit from the account’s punctual repayment of loan Credit cards and EMIs, for example. The credit score of the account owner can also affect your own. However, it could be the reverse. If he defaults on his payments, the negative effect on his credit report may affect yours, too.
#3 Apply For A Secured Credit Card
You could apply for a secured credit card. The deposit of a fixed amount secures credit cards. Therefore, they can be approved more quickly than unsecured ones. The credit limit you receive will be the same as your deposit amount. For example, if your fixed deposit is worth Rs. 60,000, you’ll receive a credit card with an amount of credit of Rs. 60,000. Make sure you pay your credit card bill on time using a secure credit card. By doing this, you can improve your credit rating. Secured credit cards positively show your creditworthiness. They can automatically upgrade to an unsecured credit card or request one when you have a high credit rating.
#4 Reporting rental payments
Rent has a significant effect on the credit report. Thus, making your rent payments punctually is an excellent method to improve your credit rating. If you do not inform your tenant or your property manager and property manager, you can’t make a report of your rent payment to credit rating companies and credit bureaus. Rent payments will not appear in your credit reports unless reported to an agency for credit. Credit rating agencies or bureaus are not able to access information regarding your rental payment until you give the information to them.
#5 Apply for a Peer-to-peer lending loan
Peer-to-peer lending, also known as P2P lending, is a new method of financing that allows people to borrow from others via websites that offer lending. If you cannot obtain a loan through the bank you work with or NBFC, You can get an offer from your banking institution or NBFC.
These loans have higher interest rates for borrowers with poor credit histories or ratings. But, they are used to increase your credit score because these lending platforms from peer-to-peer lenders report to credit bureaus. Be sure to avoid borrowing more than you can use or spending the money on unnecessary purchases.
Conclusion
If you adhere to one of the above methods, you can get a good credit score and be punctual with your payments since even late fees can adversely affect your credit rating. Therefore, after establishing your credit score and bringing it to excellence, if there are repeated payments that you have not made, then it will cost you the effort you have put into improving your score.
