Five Ways To Boost Your Credit Without Going Into Debt

Sometimes it seems like the only advice on how to build your credit involves more debt. Methods like using your credit card or taking out a loan with a cosigner are effective credit boosters, but they also come with risk. Is there any way to improve your credit that doesn't involve taking on more debt? The answer is a resounding yes! Here are five ways to boost your credit without going into debt.

1. Get a Credit Card and Use It!

One way is a credit card. I know! That’s a scary phrase! That sounds like you’d be taking on debt, doesn’t it? Minimum payments and interest add up and before you know it, you’re buried under a mountain of credit card bills that are genuinely painful to pay, right? Well, not exactly. You don’t have to take on any debt or pay a dime in interest, just because you have a credit card in your name.

So, how do we manage that? How do we ensure we don’t suffocate under the weight of what we owe?

Well, we could just not use our credit card, right?

Not exactly. You see, not using your credit card at all isn’t likely going to move your credit score anywhere, whether it be up or down. Again, the problem is that credit bureaus would have nothing to judge you one. There is no way to tell how well you pay back funds you’ve borrowed, unless you use your credit card from time to time.

Pay off your balance in full every month to avoid interest charges, and enjoy the positive reporting on your credit score! That’s it. That’s all you have to do. Maybe pay for your groceries every month on your credit card and use your grocery budget to pay off your credit card bill in full every month. This ensures you’re establishing a record of on-time payments and the bureaus can all see you’ve got great repayment habits. It also means you’re not paying any interest because you’re not carrying a balance.

Sure, there is room for failure. There is always the temptation to overspend or maybe there’s an emergency and you have to use more on your credit card one month than you planned. All it takes though, is a little willpower and a little dedication and you should be able to stick to it. Save for an emergency fund so you don’t have to use your credit card, and don’t spend outside of your budget.

Another factor to consider too is that although this will build up your credit some, credit cards don't increase your score vastly. This is because they can take away your credit card at any time (making it a low risk for lenders).

2. Obtain Your Credit Report

- While this won’t improve your score on its own, the information it contains and what you will learn, definitely will! Your full credit report will show you the areas that you need to work on, and it allows you to narrow your focus and hone your energy on those particular issues.

3. Reduce Your Credit Percentage

- Your credit usage percentage is a measurement of how much of your credit you’ve used. You want to keep your credit usage percentage below 30% to see improvement in your credit score. Paying off your debts will help reduce your credit usage percentage!

4. Regularly Review Your Statements

- There are two reasons you should do this. Firstly, reviewing your statements will allow you to see your usage percentage. Secondly, you'll be able to catch any identity theft or fraud on your account before it wreaks havoc on your credit score.

5. Get A Secured Savings Loan

- A different way to build credit safely is to start using a credit building program. Refresh offers credit building that ensures you don't go into debt! With this option, not only do you avoid accumulating debt, but you wind up with a chunk of cash at the end.  A secured savings loan is just like a secured credit card, except you don’t need any upfront funds to secure it. Instead, the loan principal acts as the security. Once you sign up, you pick the program that suits your budget. You make small, regular payments that are reported to the credit bureaus every month as there is an interest amount in each payment, just like a traditional loan! This makes it super easy to build credit without risk. If you're worried about overspending on a credit card, or aren't approved for a credit card, then this may just be your best bet.

Building your credit doesn’t always mean taking on more debt. There are low-risk options out there for people who are serious about changing their financial situation!

You can learn more about the credit building programs from Refresh Financial!