Credit card is like borrowed money, which is used to purchase goods and services. Credit means receive something of value and promise to pay for it later.
Consumers use credit for everything like food, clothes, furniture, housing, transportation as so on. In case of finance, credit means the agreement between the buyers and sellers. Buyers receives the goods and services in advance and makes payment later.
Credit cards are issued by the finance company and it has higher interest rate – about 19% per year in 2020. Almost in every showroom, and stores allow the payment through the credit cards.
In the United States, it is the most common payment process in the stores. Various banks issues credit cards to the customers on the basis of their previous reputation.
In current times, you can also build credit from various financial institutions without any credit card. Here are some methods explained below:
Tips to build up your credit without a credit card
Apply for secured credit cards:
A secured card is backed by a cash deposit; the deposit amount is same as your credit limit. Secured card is not meant for use forever it is for the purpose of building your credit enough to qualify for an unsecured card. It is basically a card without deposit with better benefits.
Get a credit for the rent you pay:
Rent reporting services like rent track take a bill you already paying and it is generally put into your credit report. These reports are enough to get the loan on credit cards that establish the credit history from the credit lenders.
Piggyback on someone else’s credit:
If someone not using the credit cards then they can sign on the authorized users such as friends or a family members credit cards. But in that case, it is very important that sign on, with someone you trust. By chance, if you feel unhappy with the account holder’s activity then you can remove yourself from the account.
Apply for credit builder loans:
The main purpose of the credit builder loans is to help the people for building the credit. It is offered by the credit union and the community banks and as long as it is online process offered by the lenders.
This is offered by the credit union or banks. It is a solution for instant cash and its main purpose is to use for the marriage, traveling, medicines, home renovations, car loans, children education etc. It is a secured loan against any assets as well. Usually Personal loan is required for the personal use, or we can say for individual need.
Apply for peer to peer loan:
It is allotted by the banker, investor and credit union. These loans are availed online by the companies that deal in financial services. The credit senders determine the terms but guidelines are generally not stringent as bank. In other words, peer to peer loans refer to the student’s loans, real estate loans and commercial loans.
There are some other tips to build your credit also suggested here at cnbc.com.
My self Steven Anderson is a investment banking instructor with over 15 years of experience teaching analysts, associates and senior management within financial institutions how to be more effective at their jobs and write about financial issue due to bad credit score in various cities for Techoko.com. For more information you can contact with me directly at facebook, Twitter & you can follow me on Instagram.