Building credit without accumulating debt can be a tricky thing to do, especially if you’re just starting out. “One of the biggest credit score myths is that having an excellent credit score requires going into debt.”Nick Clements for Forbes.com
But don’t worry, because it is actually possible to build credit without debt if you follow the next credit building tips. I should also say that these tips can be used by anyone, whether they receive wage income on a W2 with a Social Security Number (SSN) or report self employment income under a 1099 – even if it’s with an Individual Tax Identification Number (ITIN).
Establish credit without debt
If you don’t have a credit history, it can be difficult to get a credit card. However, there are some things you can do to help yourself. First, try to get a secured card. A secured credit card is great to build credit without debt because it requires you to make a deposit, which will be used as collateral if you default on your payments. Second, you can become an authorized user on someone else’s credit card account. This requires extreme caution and discretion, both from you and from the person who grants you access to the credit card, any mistake or late payment will affect both of you.
A third way to start credit if you don’t find or qualify for a secured credit card is thru credit builders such as Kikoff.com & credit builder loans such as self. One little company, yet very powerful credit builder is Grow – which allows you to build credit for free by giving you a digital free Mastercard that you can use to pay subscriptions such as Netflix, Amazon, and more. While you use it for free with no fees or interest you will also be building credit without getting into debt.
How to build credit without debt and without credit history.
To establish credit without increasing debt, you must practice good financial habits. One way to do this is by paying off the full card balance before the due date. This shows creditors that you are responsible with your cards and can be trusted to make payments on time. If you do this well enough, you’ll begin to build a positive payment history. Soon, you will start receiving card offers from banks and financial institutions with pre-approvals for credit cards that do not require deposits or collateral.
Pay off your debts, avoid more debts, and stay responsible.
It can be easy to get into debt if you’re not careful. Once you have a debt, it will continue to accumulate and become increasingly difficult to pay off. The best way to avoid this situation is to be responsible with your money. If you are not responsible with your own money, how could you be responsible with borrowed money? Being responsible simply means spending only what you can afford, and saving for what you can’t, instead of putting them on credit-card. If you are just starting out, this is where having a budget to control your expenses will come in handy.
However, if you are already in debt, before you can build credit without debt you will need to pay off your current debts and liabilitie. Work on the following plan to pay off your debt fast and as quickly as possible.
- Create a list of your debts including interest.
- Concentrate on paying off the debt with the highest interest first.
- Continue paying the next one, and so on until you eliminate your debts.
- For an advanced debt settlement solution, contact a Prosperity Leaders Certified Field Financial Producer who can assist you with advanced debt settlement strategies, debt settlement and renegotiation, and credit repair solutions.