Credit enables a person to do things such as take out a mortgage on a home, get loans for automobiles, receive student loans for education and even get business loans from the government or a bank. That's why it's valuable to start building good credit as soon as possible. There are many savvy ways to build credit aside from using a traditional credit card.
Checking and Savings Accounts
Opening checking and savings accounts is one of the first steps in building credit. Credit lenders look at checking and savings accounts as a sign of financial stability. Regularly depositing money into your account and avoiding overdrafts shows lenders you are responsible with your money.
Secured Credit Cards
Secured credit cards are one of the safest ways to build credit. With a secured credit card you deposit the amount of your credit limit before you use the card, so you can never overspend. You have to pay a small fee to use a secured credit card, but anyone can be approved for one since they are prepaid. Secured credit cards are also a great option for people who need to repair their credit. A good secured credit card will also convert to a normal credit card after 12 to 18 months of responsible use.
Store Credit Cards
Many retail stores and gas stations offer credit cards to their customers. These cards do not have as large of an impact on your credit score as bank-issued cards do, but they are typically easy to get approved for and often offer additional bonuses to the holder, such as "same as cash" specials and/or customer reward points.
Installment Loans
Installment loans are short-term loans for people with no credit or bad credit. There are also commonly called "payday loans." To get an installment loan, you are typically required to show proof of income along with a utility or cell phone bill. The benefit of using installment loans to build credit is that they are easy to get approved for and can be paid back quickly before lots of interest accumulates.
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