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When building credit, people will often use credit cards to responsibly manage their debt. However, you might not have known that it is more than possible to build credit without having a credit card at all!
Your credit score is based on being responsible for your credit management. Lenders will look at that three-digit number to determine whether or not you are a potential credit risk.
Your payment history makes up 35% of your FICO score, which is the largest portion of this score. This is why we constantly stress how important it is to make on-time payments for your credit accounts, as it can lead to a positive impact on your score.
Your credit utilization ratio is the ratio between the outstanding debt and your revolving account balance. This ratio is expressed with a percentage. When you have a lower credit utilization ratio, you have a better credit score.
Length of Credit History
The length of your credit history makes up around 15% of your credit score. More often than not, the longer your credit history, the higher your credit score.
Having a mix of credit is crucial, as not all credit accounts are managed in the same way. A creditor wants to make sure that the borrower is able to manage different types of credit accounts well. Having a mix of credit, including revolving credit accounts and installment loans, can help boost your credit score.
Remember, credit mix makes up 10% of your credit score, which is a pretty significant portion.
New Credit Inquiries
The last thing you need to worry about is new credit inquiries. Your recent credit inquiries make up 10% of your FICO credit score too. If you’ve made credit inquiries in the past 6 to 12 months, there is a chance that it will lower your credit score.
So, as you can see, you don’t necessarily need a credit card to build your credit score. Rather, you can look at these elements and decide what efforts make the most sense to your situation based on how relevant they are.
One thing we highly recommend trying here at Personal Tradelines is making use of authorized user tradelines to potentially boost your score. With tradelines, you can take advantage of the good credit scores other consumers have been building for many years.
Here at Personal Tradelines, we’re all about making sure our customers are confident throughout the tradeline buying process. We’re here to provide all of the necessary knowledge so that you can find the tradelines for sale that fits your situation best.
Make sure to get in contact with us when you are ready to take the first step toward great credit!