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Myth, Busted: How to Establish Credit Without a Credit Card

To establish good credit, your parents probably told you the same thing their parents told them, and their parents told them, and so on: You need a credit card. But this is one family tradition that needs to be broken.


To build your credit, according to the old-school way of thinking, you needed a low-limit credit card to make frequent small purchases you paid off in full each month. While that logic might sound good in theory, things don't usually work out that way. Spending can go overboard, payments might be missed and paying off in full can be easily overshadowed when you see how low minimum payments might be.

That's why Beneficial Bank is stepping in with these banker-approved tips on how to build a healthy credit score without signing up for a credit card. After all, establishing good credit is essential if you want to buy (or rent) a home, have a manageable car insurance payment, take out a loan down the road, and it can even impact your chances of landing a job.

1. Plan for Tomorrow

Create a monthly budget to track your cash flow to see how much money you have coming in each month and how much needs to be allotted for bills and expenses. Use an app, or online tool, that breaks down your spending by categories each month. Seeing where you spend the most will give you the insight you need to stay on budget each month, as well as where you may need to cut back.

2. Pay Bills On Time

Paying monthly bills on time makes up 35 percent of your credit score, which is why staying on schedule is key to building a strong score. If writing checks isn't your style, or you tend to be forgetful, signing up for a secure automatic bill pay through your bank is a great way to make sure your bills are always paid on time. Late payments will knock your score down and raise interest rates—an unhealthy recipe for your bank account at the end of the month. With Beneficial Bank's Online Bill Pay, you can track upcoming payments and view your history to ensure no surprises hit you at the end of the month.  

3. Manage Debt (Don't Ignore It)

Whether you're new to building credit or you've already established a score and you want to repair it, ignoring debt or an overdue payment is not going to make it go away. Paying bills on time and managing debt appropriately are two of the biggest factors affecting your credit score.  Instead of dodging phone calls and letters from creditors, call them directly to discuss setting up an easier payment plan that works with your monthly budget. Fixing a mistake reflects more positively on your credit score than ignoring it completely.

4. Apply for Loans Early

Don't wait till debt comes knocking at your door. A secured loan is a great way to build credit by working with a banker to create realistic monthly payment plans without the crazy high interest rates. With a Beneficial Bank secured loan*, your line of credit is guaranteed by an asset you own, like a house, a car or a savings or time deposit account. So, you can get the money you need today while building the credit you need for a strong financial future.

5. Check Your Score Annually

Obtaining a copy of your credit report at least once a year ensures your credit history is accurate (for better or for worse). If there is an error on your credit report, contact the reporting credit agency and work with them to correct the mistake. You're entitled to one free credit report every 12 months from Annualcreditreport.com which will not affect your score.

6. More Isn't Always Better

Don't ask for debt you don't need.  Applying for multiple credit cards and/or loans throughout the year will start to take a toll on your credit score whether you're approved or not.  So, when mom and dad ask "What kind of bank doesn't offer credit cards?" Tell them the one that has your best interests in mind. The Beneficial Bank Visa® Debit Card is the perfect solution to keep your finances healthy. See how you can get started by visiting TheBeneficial.com today.

* All loan products subject to credit approval.


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