Build Your Credit Without a Credit Card

How to Build Your Credit Without a Credit Card

Build Your Credit Without a Credit Card

Photo credit: Flickr

Even if you choose to remain debt free, having a good credit score should still be a priority. One reason it should be important is because many utility and insurance companies look at your credit score to determine what you'll pay for insurance.

Are you searching for a job? Not all, but some employers will use credit reports upon screening job applicants, so having a good credit history could improve your chances of getting the job you really want.

If you ever do decide to get a loan, you don't want to be stuck with high interest rates. The better your credit the lower your interest rates will be on future secured and unsecured loans. Having a lower interest rate helps you pay off the debt much easier and quicker than a loan with higher rates.

What to Do Before You Start to Build Your Credit Without a Credit Card

The very first thing you should do is view your credit report for any inaccurate information. If something isn't correct, following the instructions on the report for sending in a dispute.

So, how do you get your credit report and what will it cost you? By law you are entitled to one free report from each of the three major credit bureaus: TransUnion, Experian and Equifax. Go to annualcreditreport.com to send your request to all three aforementioned bureaus.

Three Great Ways You Can Build Your Credit Without a Credit Card

1. Get a credit builder loan (a.k.a. secured personal loans, fresh start loans or starting over loans).

With a credit builder loan, you don't receive the money upfront as you would with a normal loan. What usually happens is the lender will agree to loan you $1,000 or less, but rather than giving you the money, they put it into a special account and hold it until you pay it off. You will agree on a minimum monthly amount to pay. Then once you've paid off the loan, the lender will release the loan amount -- and in most cases -- the interest it drew. Then you'll be free to spend it on whatever you like. Just make sure you make the monthly payments on time, because this is what's going to build your credit.

Financial institutes that usually offer credit builder loans are community banks and credit unions. If you're unable to find a bank or credit union in your local area that offers these type loans, there are online lenders such as Self Lender. Before using an online lender, do your homework by reading reviews about the company and read all the fine print in regards to the loan you plan on applying for.

2. Take out a secure loan against your CD or savings account.

If you want to build your credit but need money right away for an emergency situation or etc. and you have a CD or savings account, ask the financial institute that your account is with for secure loan. Let them know you want to use your CD or savings account as the collateral.

If you don't need the money for anything and you're just trying to raise your credit score, the best way to pay back the loan is to put the money you borrowed into a new checking account that you can open with a different financial institute, and ONLY use that money to pay off the secured loan. You'll better build your credit by making more than the minimum monthly payment for at least a few months before you pay in full.

Recommendations to Help You Save
CIT Bank CDs provide a safe, secure way to grow your savings. Choose from a selection of CD rates and terms to help you stay on target for your savings goals. Open an account today.

Open a Premier High Yield Savings account and get a 1.55% APY. See site for full terms and conditions on this offer.

Open a CIT Bank Money Market account and get a 1.85% APY. See site for full terms and conditions on this offer.

3. Ask your utility companies to report your account activity to TransUnion, Experian and Equifax.

Although utility companies don't normally report account activity, some will if you ask them to, so it doesn't hurt to ask. As long as you pay your electric, water and other bills on time, and the utility companies you pay your bills to agree to report your activity, this could also improve your credit score. You must do your very best, though, to continue making timely payments or you'll hurt your credit rather than help it.

What to Do After You Begin to Build Your Credit Without a Credit Card

Once you start working on obtaining good credit using one or more of my suggestions, you may want to keep track of how well you're doing. By signing up for a free Credit Sesame account, you'll be able to keep an eye on your credit score. The higher your score, the better!

Credit Sesame is totally free! I've been with them for almost a year now, and I can tell you for certain that unlike some other companies out there, this is not a free trial where you have to sign up and cancel before you're charged a fee. It is totally free, and they won't ask you for your credit or debit card information. Again, it is 100% free, so go ahead and sign up today to see your current credit score and other information that will help you build your credit.

Have you discovered a way that I haven't mentioned to build your credit without a credit card? If you have, please comment to share your credit-building story with others. Or if you want to share everything about your story (how much it helped, what you did, tips, etc.), contact me and I may write about it and publish it here at Living Frugally.

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Eliminating Credit Card Debt

Eliminating Credit Card Debt: It’s Not as Difficult as You Think

Eliminating Credit Card Debt

The sad truth is many of us get a credit card just to build our credit history, but what we fail to recognize is there are ways to establish a good credit history without having a credit card.

Regardless of why you got the card or cards, you're now stressing over the credit card debt you've accumulated, because at this point you're thinking you're never going to be able to eliminate your credit card debt.

It's alright, my friend. Just take a deep breath and relax, because I'm here to assure you that eliminating credit card debt is achievable. Yes, it will take time, but if you follow my advice, your persistence will result in freedom from the credit card debt.

Eliminating Credit Card Debt Without Consolidating

Try to work it into your monthly household budget to pay more than the minimum amount due. When you choose to pay more than the minimum monthly amount, you'll pay your card off sooner, and the most important reason to do this is you'll pay less in interest rates. To give you an example, according to Bankrate's credit card payoff calculator, if you have a credit card with a $1,000 balance, an interest rate of 20% and a minimum monthly payment of $25.00, it will take you 67 months to pay off the card if you only pay the minimum of $25.00. Furthermore, once the card is paid off in that amount of time, you will have paid a total of $661.00 in interest. However, if you pay $50.00 a month instead of the minimum, you'll pay the card off in 25 months and only pay $226.00 in interest, a savings of $435.00.

Begin by paying off the credit cards with the lowest balance first. Many may disagree and argue that paying off credit cards with the highest interest rate first is the way to go, but in my own personal experience, paying off the cards with the lowest balance worked best for my husband and me. What this did was get those debts out of the way, and then we were able to budget in a higher monthly payment to pay off the cards with a higher interest rate much quicker.

Pay off the entire credit card balance or a big portion of it with your tax return money. Again, choose to pay off the cards with the lowest balances first. This way you're paying off more than just one card, which again, leaves you more money to work with to tackle the cards with higher interest rates.

Transfer your credit card debts to a card with lower rates. Some credit card companies offer promotions of no interest charges to new customers who transfer their credit card debt.

Eliminating Credit Card Debt Totaling $10,000 or More

Sometimes -- especially if you have credit card debt of $10,000 or more -- you may need help paying off the debt. Maybe you're having some financial hardships that is making it tough for you to work your credit card payments into your monthly budget and/or your behind on payments. In a lot of these cases, people find it's easier to combine their debt and just make one monthly payment.

If you think combining your debt and making one monthly payment is the best option for you right now, National Debt Relief may be able to help you. If your credit card debt is less than $10,000 or you live in Connecticut, Georgia, Kansas, Maine, New Hampshire, South Carolina, Oregon, Vermont or West Virginia, unfortunately, National Debt Relief won't be able to help you.

If you have more than $10,000 in credit card debt, you live in a state that I didn't mention above and you're serious about getting help, you can call National Debt Relief at this number to see if they can help you: 866-258-9371. Maybe you want to learn more about them and what they can do before you call. No problem, just head over to the National Debt Relief website.

Before committing to anything with National Debt Relief, I urge you to read all the fine print in anything they send you and ask questions about anything you don't understand or want to know more about to ensure you're making the best decision. A few questions you should ask if you're approved for help are as follows (feel free to write them down): What is the total amount I'll be paying off, including your fee for helping me? What are your interest rates? How long will it take me to pay the debt off doing it this way?

What to Do After Eliminating Your Credit Card Debt

Once you've paid off your credit card debt, my best advice to you would be to cancel and shred ALL your credit cards. You'll do much better by putting money into a savings account for emergencies and building your credit through other means rather than having a credit card on hand.

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As my thanks to you for subscribing, you'll receive a FREE PDF filled with over 25 money-saving online tools and apps! This freebie will be e-mailed to you immediately after you confirm your subscription to the Living Frugally newsletter.

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Simple Monthly Household Budget Plan

Stressed Over Bills? This Simple Monthly Household Budget Plan Can Help

Simple Monthly Household Budget Plan
Many things in life cause us stress. I don't know about you, but for me I think the thing that causes me the most stress is bills. If I were rich, this would be different, of course, because I'd have the money to pay my bills and debts with quite a bit left over. However, that's not the case.

I got tired of the constant headaches from being stressed over bills, so I came up with a simple monthly household budget plan to help reduce my stress. This plan has allowed me to have a little extra money leftover from paychecks to do as my husband and I want each month. In fact, it's worked so well for me the past few years that others have asked me to help them create the same budget plan for their household, which I gladly did.

If you are tired of the never-ending headaches and loss of sleep from not being able to come up with a budget that lets you pay your bills and still have a little extra money left over, try this simple monthly household budget plan I'm sharing with you.

Step 1: Create a Table of All Your Bills & Debts

Before you can even begin with a household budget plan, you need to know how much money is going out, when each bill is due and how much you owe on your debts (if you have them).

Create your table by starting a new text document using your favorite word processor program (I use Open Office, which is a free alternative to Microsoft Office). The table you create needs to have five columns: bill, frequency (how often you make the payment), due date, amount and monthly payment or payment amount (whichever you prefer).

When you enter the amounts for bills that vary each month (e.g. electricity, water, etc.), put an estimated amount for those. The estimated amount should be an amount close to what that utility normally runs you each month.

For debts such as credit cards, loans and etc. that have set minimum payments, try to budget in more than the minimum payment. This will help you to pay off the debt sooner and not pay as much interest. Using an example, let's say you have a credit card that totals $500.00, and you would like to pay that card off in 10 months. When you divide 500 by 10, you get 50. If you can work $50.00 a month into your household budget plan, you can have that credit card paid off before the year is up. If you can't go that high, you may have to set a goal of one year or a little over a year to pay it off. Just keep dividing the balance due by the number of months you'd like to increase it to until you come up with an amount you can afford to work into your budget.

If you have quite a few debts and/or would like some help trying to pay them off and figure out a monthly payment plan that will work for you, I recommend Undebt.it. Undebt.it is a FREE debt payment manager. I have personally played around with it a few times and found it to be very helpful. I also have plans to write a review about it and post that review here at Living Frugally.

After you've completed the table with all your bills and debts, insert a final row in your table, then "merge" the cell and include the monthly and yearly totals of all your bills and debts. Following is an example of what your table should look like.

Household Budget Plan - Bills & Debts

Sample table of bills & debts.

Final Step: Prepare Your Monthly Household Budget Plan

Now that you've created a table of all your household bills and debts, your next step is to create another table for each month (January - February). You'll start a new page for each month. For example, page two will be January (page one is your list of bills and debts), page three will be February and so on.

Now, create a table with five columns. The columns will be payday, bills & amounts, total of all, check amount and left after bills. For payday, you'll enter the day of each payday. If you get paid weekly, insert four rows for four paydays.

The bills & amounts column will be the bills you pay on that payday, as well as the amount of those bills. Refer back to the table that lists all your bills and debts to fill in this information for each payday, because you'll need the amounts and due dates of all the bills and debts that you will be paying for that month. If possible, you want to pay them before their due dates to avoid late fees.

For each payday, it is also helpful if you can include an amount to put into a savings account for emergencies and/or a Christmas fund. You may also figure in approximately how much you will need for gasoline and groceries during that week.

Be sure when you are filling out your monthly household budget plan, you also include any yearly payments that may be due on the month you are creating your budget for.

In the total of all column, this will be the grand total of all the bills you will be paying with that day's paycheck.

The check amount column will be the amount of your paycheck for that payday. Since you will be creating your budget plan ahead of time, you can figure with an estimated amount, which would be an average of what your usual net income is. Let's say your paychecks are usually a little over $500.00 a week. In that case, just figure with $500.00. You can always adjust this and work things around, if needed, after you get paid, but for the budget plan, it's best to work with a number close to what you usually bring home.

For the final column, this will be the extra spending money you have left from paying your bills for that week. This amount could be more depending on what your paycheck will actually be for that week. Or if you had to miss a day or two of work for some reason, it might be less.

In an effort to help you better understand, take a look at the example monthly household budget plan below (click the image to enlarge it). The example budget plan does not include all 12 months. I just completed two months to give you an idea of what you will be doing. In addition, to make things easier when you are creating your budget plan for the entire year, you can copy and paste the tables to the new pages, and then just edit the months, payday days, bills you will be paying on each payday and etc..

In this example, we'll be using the bills and debts from the sample table in step one. This sample monthly household budget plan was created using an average net income of $500.00 a week, with the payday being every Friday. If this sample still does not help you and/or you have any questions, feel free to shoot me an email or leave a comment below, and I'll do what I can to help you. I can even get you started by doing a few months for you, and any information you give me will be kept completely confidential.

Sample Monthly Household Budget Plan

A sample monthly household budget plan.

Additional Tips to Better Your Monthly Household Budget Plan

When the bill or debt has a big monthly payment, it helps to split the payment for paydays (see the example). You will, however, have to be able to hold some of the money and NOT spend it. If you are the type of person who does not have the willpower to do this, you can give it to someone you trust and ask them to hold it for you until you have the rest of it. Then when you have the entire amount, pay the bill or debt that it's for, before the due date.

Use your tax refund to pay off some of your debts. I always try to pay off the debts with bigger monthly payments. This helps me have more leftover from each paycheck. Naturally, though, the pay offs on some of those debts will be more than your refund, so you will have to work with the debts that are not bigger than your refund. And you can always choose to use the majority or all of your refund to get closer to being debt free rather than rewarding yourself with gifts. Using your entire refund to pay off debts truly is the best option, because you can reward yourself more than just once a year when you have eliminated monthly payments from your budget. Without those extra payments, you will have more leftover from your paychecks. That would be nice, right? 😉

Put your cashback refunds from reward programs towards paying off smaller debts, or pay a smaller bill for a week that you may need extra money for an emergency vehicle repair or etc.. Furthermore, you can choose to put these small refunds into your savings account.

If you stick to this monthly household budget plan, I'm pretty certain you'll be a lot happier, have less headaches, and if the bills was all that was keeping you awake at night, then you will fall asleep much faster as well.

Subscribe to the Living Frugally Newsletter for Updates & More!

Living Frugally Newsletter FreebieWhen you subscribe, you'll get notifications when new money-saving advice has been added to the site. Each newsletter will also include at least five freebies (sometimes more) and a money-saving tip. Furthermore, you'll get occasional alerts about what I believe are the BEST deals.

As my thanks to you for subscribing, you'll receive a FREE PDF filled with over 25 money-saving online tools and apps! This freebie will be emailed to you immediately after you confirm your subscription to the Living Frugally newsletter. When I updated the PDF freebie with new online tools and apps that save you money, I will send out an email letting you know about those updates, and I'll include a link where you can go to download the updated version.
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