Your credit score is a number that reflects the trust credit reference agencies place in you when repaying loans and managing money. In most cases, a good credit rating is required if you want to take out a loan in the UK. Naturally, this can be a hindrance for people with poor credit ratings or limited credit histories. If you don’t feel like using a credit card, there are other ways to build a solid credit score to give you financial flexibility. Here are five alternatives to using a credit card to build a credit score.
1. Use buy-it-now and pay-later programs
Your credit score reflects your creditworthiness for all types of borrowing. Therefore, both buy-it-now and pay-later programs may count toward your score. If you’re confident you can make payments on time and repay the amount you spend, using a buy it now and pay later program is a great way to boost your score without a credit card.
However, it is important that you pay attention to the interest rate of the plan you are using. Much like credit card borrowing, buy-it-now and pay-later systems will charge interest on the money you borrow to make purchases. Over time, this interest can accumulate and you may end up paying back a lot more than you originally borrowed.
2. Register to vote
In the UK, you can establish your credit score by simply registering to vote! This is a great option for anyone who doesn’t want to borrow money to build up a credit score. Registering to vote increases your score by confirming your name and address. Confirming these details makes you a stronger candidate for loans, as it proves your credibility.
3. Put your name on household bills
If your utility bills are in someone else’s name, it might be helpful to add your name to a few. Paying bills every month is a fantastic way to prove creditworthiness and can help your overall credit score.
If you live with other people, you might want to take a look at who’s name is currently on the bills and make changes if yours doesn’t appear on any. Common household bills include gas and electricity bills, rent, broadband and council tax.
4. Open a joint account
If you have a family member or partner with an excellent credit history, you could apply to open a joint account with them. Joint accounts contribute to both of your credit scores, which means you can benefit from their good spending habits.
If you’re worried about the implications of borrowing money on credit cards, this can also be a great way to make your job easier. This is a popular option with couples and parents who want to teach their children how to manage credit.
5. Take out a personal loan
A good way to prove credit without using a credit card is to take out and repay a small personal loan. Personal loans often have much lower interest rates than credit card debt, so they’re a great option for those who don’t want to risk paying back much more than they borrowed.
If you choose this option, be sure to repay your loan on time and make larger payments when you can to pay it off faster. The faster you can repay what you borrowed, the better your credit score will be.
If you need to build good credit quickly, there are a number of fantastic credit cards designed to build credit. Take a look at our list of top rated credit cards for bad credit to learn more!
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