To ensure financial stability, it has become essential to maintain a good credit score these days. For those who aren’t aware that a credit score is a number that reflects how creditworthy you are or how responsible you are as an entrepreneur. Your credit score depends on your credit history that includes your past payment behavior as well as your credit utilization and a lot more factors and it is likely that you will get granted a credit card only if you have a good credit history & score. What can you do to build up an excellent credit history without having a credit score? This article will provide the answer to that question. Continue reading to learn how to earn credit with no credit card.
How to improve your credit score
Make sure you have a secured credit card
Secured credit cards are those that can be issued with an amount that is fixed. To obtain a credit card, you have to deposit a certain amount to the card issuer. They will keep this money as a security deposit in order to be eligible to use in the event of a default. If you use your credit card with care and have paid all dues and fees, the money is refunded. A secured credit card is among the most efficient and effective ways to build your credit score beginning from beginning. It’s not enough just to be able to obtain it. It is essential to utilize it properly and pay all of your expenses on time to build credit and be approved for an unsecured card.
Take an Personal loan
Credit cards aren’t the only way to establish credit score, but you can also accomplish this by taking out a personal loan from an authorized financial institution. It is not easy to secure an individual loan without an outstanding credit score. There are some lenders who will loan you money, but most likely at high interest rates. It is possible to take out a personal loan and pay all its EMIs prior to the due date to earn an excellent credit score. Additionally, if you purchase something on your debit card EMI and then make all the payments on time, your bank may give you credit card because they be able to see you as a responsible consumer.
Join Buy Now Pay Later/Postpaid Option
Today, nearly all major online retailers offer their customers the pay now option. This is like credit cards. It is possible to purchase items with cash and pay for them later. While each customer has a different Credit limit but it can be enough to increase the credit score . You can, for instance, pay with Paytm Postpaid. You’ll get credit up to Rs. You may use this credit limit (perhaps Rs. 1,000 initially) to fulfill a variety of purposes, such as DTH recharges and DTH and mobile recharges, as well as transactions at departmental shops as well as restaurants. Flipkart Pay Later is an alternative that is similar to Pay Later and is convenient. Pay your bills on time and again.
Understand All The Factors Affecting your credit score
Your history of payments will affect your credit score. 35% of your credit score is determined by your payment history. In order to get a high credit score, you must be sure to pay your credit card bills and loan EMIs on time.
Credit Utilization Rate – Your credit score is affected by the Credit Utilization Ratio. It is recommended to use only 30 percent or less of your credit limit to maintain a good credit score as using most of your credit limit could make your card issuer consider you to be a risky borrower.
The length of your credit history –The length of your credit history must be extensive or your average age for credit cards should be high to achieve a favorable credit score. It is not recommended to close accounts with credit that aren’t being used.
Credit Mix – It is recommended to have multiple types of credit, such as personal loans and credit cards. It is best to own multiple credit cards. Responsible credit management is a sign you are creditworthy.
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Bottom line
There’s no need to be concerned for a moment if you’re new in credit card business. There are numerous ways to build credit history. If you don’t have a credit record, you should consider one of these choices. A high credit score will help you over the long run. Secured credit cards could be considered the most convenient option since it will not only help you build your credit score, but aid in understanding how to utilize a credit card in a responsible way and responsibly. If you don’t wish to deposit money to obtain a credit card it is possible to use the alternative options.
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