How do I establish credit without a credit card?
Credit cards are becoming more and more picky about extending credit, and the interest rates are through the roof. What are some other ways I can establish solid credit without a credit card or major expenses? I go to college full time and work full time, I don’t want to get into heavy debt.
I agree with those saying to get a credit card – find one, such as capital one, who offer low limit cards, starting at 250 dollars, to college students. You will pay some fees, but pay the card on time for 6 months (put simple recurring bills such as groceries on it and pay it off in full each month) and after the 6 months ask to be switched to a no, or low fee card. I would also apply for a small signature loan with a credit union, and a small deferred interest federally subsidized student loan if possible. This will build additional credit history and cost you nothing as the government pays the interest and payments until you are out of school. Drop it in your savings account and reap the rewards of some free conservative investment collateral. The reason you should try for these 3 items is that it shows diversity of credit in both amount and type, which highers your score – especially since in the long run your score is based off of the length of history of credit also, and you will have all three types established for a long time.
To clear up some myths – Things like cell phones (as another answerer suggested) and utilities do NOTHING to help your credit! The only time one of these types of accounts would be listed on one of the major credit bureaus would be if you failed to pay it. Positive payment histories are NOT reported.
Also, you very well can find a small signature loan, especially at a credit union.