- A credit history is necessary for large purchases such as a mortgage. If you would rather not use a traditional credit card to build your credit history, there are other options available to you. Fundamentally, you must enter into an agreement with a lender to purchase a good or service with payments made over time or on a regular basis. You must then be sure the credit reporting agencies know your history of payment.
- A secured credit card requires you to make a cash deposit to the lender. The amount you can spend on the card is then a percentage of or the full amount of the deposit. Start with a financial institution that you trust, such as your bank, when looking for a secured credit provider. Make sure fees and interest charged on the card are low enough so that you can maintain a clean record of payments. Ask whether the card's history will be reported to credit reporting agencies before signing up. To build credit, you want to make sure the credit reporting agencies know how well you are doing with your payments.
- Phone bills, cable, Internet and utility payments can all be reported to credit agencies. If you split the costs with another individual and the bills are in that person's name, no one knows that you're paying your bills on time. Make sure you have some service payments on your own record and pay them on time. If you are unsure as to whether any of these services report to the credit agencies, call them and ask if they do.
- Goods purchased with installment payments over time can help build your credit history. It is important that this be done formally so the credit reporting agencies know. For example, if you agree to buy a used car from your neighbor by paying him $500 a month for four months, even if you pay him on time, it won't help your credit. The same deal with a car dealership, however, can be reported to an agency and positively influence your credit history.
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