In India, there is a lot of importance attached to having a good credit score for loans and credit cards. But, if many people do not have a credit card it is difficult to establish a credit history. The good news for all such situations is that there are plenty of ways to have a good credit score, even without a credit card. The first way to do this is to have a good credit utilization ratio. Here are 5 ways that are simple to use establish a credit profile and a good credit score without using a credit card:
Obtaining Small Loans
There is also another way of building creditworthiness even when you don’t own a credit card. You can obtain a small loan from a bank or a Non-Banking Financial Company (NBFC).Simply put, Bajaj Finance collects small loans from 10% to 31% interest rates based on your creditworthiness, monthly income, employment and a number of other elements.
Timely repayment of such loans will show a level of money management, benefitting your creditworthiness. Secured loans of this type from lenders investigate your credit history and repayment consistency in great detail before not only offering you a loan, but also determining the interest rate.
Steady Utility Bill Payment And Reporting
Paying rent and utility bills shows a positive effect on your credit score, protecting you from a low credit score. Payments for utility bills typically do not go to the credit bureaus, yet you can leverage rental reporting websites in order to be rewarded for timely rental payments as they collect and verify rental payment and then report it to the credit bureaus to build a great credit report.
This is handy even if you face a stricter check hard inquiry of your credit history. Thus, it is important to maintain a solid financial reputation in the long run.
Use Of A Secured Credit Card Or Secured Loan
If an unsecured credit card is simply not possible, then you may resort to a secured loan or secured credit card backed by a fixed deposit or savings account. Paying on time on a secured loan or credit card does give you a good payment history that will aid your credit score over time. In the end, it is your pattern of consistent payments that lenders are seeking. How fair and honest will you be with your loan payments, and how consistent will you be over years? That is the thing.
Peer-To-Peer Lending And Being An Authorised Iser
Another option for building credit with alternative financial products is peer-to-peer lending. Using a loan from peer-to-peer (P2P) sites and paying it off, will demonstrate that you are able to manage debt and expenses. Further, being an applicant user or participant to these accounts with a strong history of credit repayment will help you establish credit dependency and integrity through your previous re-payment history.
Having A Stable And Consistent Employment History
A stable position of employment is also a requirement in establishing a good credit history. History of employment and duration of employment, in particular, are also more considerations for lenders when making decisions about creditworthiness because they reflect a person’s stability, finances, maturity as a person and ultimately capability to repay the debt.
Therefore, by following these simple steps you will be able to look to establish your credit score successfully all without necessarily having to directly turn to credit cards and create more possibilities in your future plans.
