Other Ways to Get Credit

Usually when you think of getting credit, you think this means getting a credit card. But there are other ways to build a good credit history other than the Plastic Road. Here are some suggestions that, as you grow older and more experienced, you’ll want to consider.

1) Open a bank account. A checking account is good; a checking plus savings account2) is even better. While future lenders might not decide to extend to you a loan based solely on a checking account, the lack of one might tip them in the other direction.

2) “Borrow” someone else’s credit history. No, we’re not talking identity theft here. Rather, you can ask someone (a parent, for instance) to add you to their card as an authorized user. Or for a more extensive loan, to co-sign it for you. Thousands of people have found that a co-signer is the fastest way to get a loan that you might not get any other way. Plus the loan payments will show up on your reports with Experian, Equifax and TransUnion–which will be a boost to you in the future. Keep in mind, though, that defaulting on the loan will hurt you, but even worse, will hurt your co-signers chances at securing future loans. 

The fastest way to establish a credit history can be to “borrow” another’s record, either by being added to a credit card as an “authorized” or joint user or by getting someone to co-sign a loan for you. 

Having a co-signer can allow you to qualify for loans you might not otherwise get. The loan will show up on your credit report and, if you pay it off responsibly, will help boost your credit score.

If you default, however, you won’t be the only one who suffers. The co-signer has basically promised to make good on this account, so any delinquencies will show up on her credit report as well. 

3) Apply for an installment loan. Financial experts agree that the path to the best possible credit score includes getting different types of credit. this means credit cards, lines of credit, and installment loans (i.e., car loans, personal loans, college loans, mortgages, etc.). get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). So while it’s certainly a good thing to receive grants and scholarships to pay for school, a school loan will be beneficial to your future.