In today’s world, where everyone is looking for financial stability, having a good credit score becomes important. Your credit score determines your eligibility for interest rates over the loans you are planning to take in the future. So, it becomes crucial to have a good credit score.
However, many people believe that the only way to build a credit score is by using credit cards.
This misconception often leaves individuals without credit cards feeling helpless when it comes to improving their creditworthiness.
The good news is that there are several alternative methods to generate a CIBIL score without credit cards. Although, there are many ways to generate a credit score the first time without credit cards, here are 5 simple ways to do the same:
1. Apply For A Secured Loan: When you’ve got no credit history, applying for a secured loan becomes a good option to generate your credit score. In secured loans, collateral is required such as a fixed deposit or a valuable asset. By providing the valuable asset, the lender feels low risk so it is more accessible to the people with no credit history. Making timely payments against the secured loan will improve your credit history and generate your credit score without credit cards.
2. Become an authorized user: If you do not have a credit card, go find someone you know who has one. If you know someone who has a good credit history along with a credit card then ask them to make you an authorised user on their credit card account. By becoming an authorized user, you will inherit the primary user’s credit history and credit utilization. If they do make timely payments then your cibil score will improve without actually having a credit card of your own.
3. Sign up for credit builder loans: Yes, there are institutions that provide loans to people who are specifically looking to build their credit score. If you are one of them, you should apply for the same. Unlike traditional loans, these credit builder loans hold your loan amount in a certificate of Deposit or CD. You will have to make timely payments against the loan and when the loan is paid off, you will receive all the funds. These types of loans are proven to build your cibil score without a credit card.
4. Open a Fixed Deposit Account: Another good method to increase your credit score without using credit cards is by starting a fixed deposit (FD) account with a bank or financial institution. With an FD, you put a certain amount of money in for a set time, usually from a few months to a few years. Now, you can finally get a credit card. You can apply for a credit card with the FD amount as the amount in the FD account becomes your credit card limit. Only thing is that you have to pay the bills back by the end of the month.
5. Pay Utility Bills On Time: We all pay out electricity bills, gas bills and water bills etc, but actually paying the bills on time affects our credit limit. These companies which provide us our utilities send their credit report to the authorities once in a while. If you are paying your bills on time, you are building a strong credit score.
At last, building your cibil score without credit is possible. It is a very easy process but it is time taking. Everything becomes easier if you have financial stability. You should always check your cibil score on a timely basis to make sure where you are. There are many platforms to do so. Is is noted that on average, one-third of the population takes out a loan at least once in their lifetime. You might be one of those three people who will have to make sure that you are eligible to get your loan and that too in a lower interest rate. After all, everyone dreams of their own car, own house and a happy family. Therefore, making sure that your cibil score is good, is the first step in achieving all the things you want financially.
