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Build Good Credit Without Credit Cards
Blog Post Date: Feb 23 2010
Build Good Credit Without Credit Cards
When you are trying to build a good credit history, one often repeated piece of advice is to get a couple of credit cards and pay them off promptly. Credit cards are not the only way to skin the credit cat, though.
Not everyone likes the idea of carrying around plastics in the first place, much less using them just to build a good credit history. If credit cards are not your cup of tea, take look at some of the other options recommended by finance blog Suburban Dollar:
Borrow from Yourself – This is the most convenient method to establish your own credit history without a credit card. Purchase a Certificate of Deposit (CD) from a bank. Then take out a secured loan against the CD for the same period of time. Put the cash you borrowed in a high-yield checking account. Then use the cash you borrowed to payback the secured loan. You will be establishing a credit history, plus earning interest on your checking account and CD. There are some disadvantages to this method. You need the starting capital to back up the CD. You could be paying more interest on the secured loan than earning through your CD and checking account in the end; however, it is probably less than what you would pay in fees and interest if you used a credit card. Just make sure to weigh the true costs before venturing this way.
We have discussed before ways to safely build your credit history and how to get credit when you have no history at all. What things have you done to improve or build good credit without getting credit cards—or are you perfectly happy with your credit card?
VIA LIfeHacker
When you are trying to build a good credit history, one often repeated piece of advice is to get a couple of credit cards and pay them off promptly. Credit cards are not the only way to skin the credit cat, though.
Not everyone likes the idea of carrying around plastics in the first place, much less using them just to build a good credit history. If credit cards are not your cup of tea, take look at some of the other options recommended by finance blog Suburban Dollar:
Borrow from Yourself – This is the most convenient method to establish your own credit history without a credit card. Purchase a Certificate of Deposit (CD) from a bank. Then take out a secured loan against the CD for the same period of time. Put the cash you borrowed in a high-yield checking account. Then use the cash you borrowed to payback the secured loan. You will be establishing a credit history, plus earning interest on your checking account and CD. There are some disadvantages to this method. You need the starting capital to back up the CD. You could be paying more interest on the secured loan than earning through your CD and checking account in the end; however, it is probably less than what you would pay in fees and interest if you used a credit card. Just make sure to weigh the true costs before venturing this way.
We have discussed before ways to safely build your credit history and how to get credit when you have no history at all. What things have you done to improve or build good credit without getting credit cards—or are you perfectly happy with your credit card?
VIA LIfeHacker
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