When you think of building your credit, credit score and credit cards pop into mind. But this virtual accounting firm is here to tell you that having a good credit score doesn’t have to include American Express plastic, variable APR and monthly payments. There are other ways to build your credit such as getting a personal loan or using your rent payment to establish your financial responsibility. Continue reading this accounting blog to learn more on ditching plastic for a great credit score.

What influences a credit score?

virtual accounting firmBefore diving into the many ways you can build your credit, this virtual accounting firm recommends you understand what factors influence a credit score. There are five categories including payment history with the most influence (35%), followed by amounts owed, length of credit history, new credit and types of credit used (10%).

Each of these factors influences your credit score in a different way, however note that they’re also all connected…meaning that if one factor is affected and drops, it impacts the others.

What has the most impact on your credit score?

Payment history reflects how often you pay your bills on time which is why it’s the biggest influencer on your credit score. You score lower if you don’t pay your bills by the due date, have a had a bankruptcy and so on. Amounts owed include all your debt from student loans to credit cards to car loans and so on. It’s your debt to what you have ratio. When it comes to new credit, you don’t want to have too many credit inquiries but you also don’t want to have none.

A little bit about credit cards.

build your credit credit cardCredit cards are a good way to build your credit because they can offer a way for you to show financial responsibility frequently and regularly. Once a month, you can prove that you’re making a payment on time and can handle your debt. However, this virtual accounting firm reminds you that there are other ways to increase your credit score.

CD loans are easy to get and can help build your credit.

You can use your savings or a CD account, and whoever grants you the CD loan can use those fund as security if you’re not able to pay them back. This way allows you to develop a credit history as well as lift up your new credit score.

Paying your rent on time can do wonders for your credit score.

Paying your rent on time credit score logoBut the truth is that most landlords don’t report paid-on-time rent payments, they do however report you to collections agency if their monthly check isn’t received on time which in turn negatively impacts your credit score.

The virtual accounting firm suggest you register with RentTrack to report your on-time rent payments to the credit bureaus to help you raise your credit score. People who signed up to RentTrack have seen their credit score go up by an average of 29 points in just two months and 132 points after 24 months.

If you don’t have a credit history, check out credit unions for credit builder loans.

These are usually small loans that you can pay off in about 12 to 24 months. Payments are placed in a CD or savings account that bears interest so you can even get a tiny bit of more than you put in when your loan is completely paid.

Personal loans

Personal loansA personal loan, or unsecured debt, isn’t backed by any collateral, but it is another way to influence your credit score without a credit card. This virtual accounting firm reminds you to expect higher interest rates and to be ready to line up a co-signer.

Become an authorized user on a friend’s or family member’s credit card.
But you have to make sure they’re responsible with their monthly payments so that it’s a positive report for you too.

This virtual accounting firm hopes one of these ways to positively impact your credit score works for building your credit score.