Build Credit Without A Credit Card

No Credit

These days it’s like a right of passage when you finally ask the question, “How do I build credit without a credit card?”  You might get a response like “Wait, you didn’t get solicited for a credit card in college?!?” or “You’ll have to pay a yearly fee to a credit card company for the honor of letting you build credit.”  Chances are though that you didn’t get solicited for a credit card in college and if you’re like me, paying for a credit card is against your financial religion.

That brings us to the chicken and egg scenario – I don’t have credit because I don’t have a credit card and I can’t get a credit card because I don’t have credit.  If you’re young and have had no chance to build credit or are not from the US, building credit is a real problem.  Finally, there is a solution!

Build Credit Though Rent Payments

If you don’t have credit, I would be willing to bet that the single largest expense you have right now is rent.  You’ve got to pay it every month to keep your landlord happy and not evict you or make your life miserable.  It’s been pretty unfair that the single largest expense you make every month doesn’t get counted.  If it was counted you would be able to build a killer credit history in about two years!

Enter RentReporting.com.  They’ve just started a service where they will make sure that you get credit for paying your rent on time.  They communicate directly with the credit processing companies making it mutually beneficial for renters and landlords to participate.

Obviously renters would love to have their rent checks count towards their credit and now knowing that they do, they will be more mindful about making their payments on time and for the complete monthly balance.  Landlords love this service because evicting a renter is very difficult and the last thing they want to do is have to be actively involved in a renter relationship trying to coax them to pay.  When renters pay in full and on time, Landlords are happy.

RentReporting.com will even go a step further and allow you to count two years of previous rent history towards your credit.  This is huge for people who want/need credit cards in the short term or people who are looking to buy a house soon.  Two years of rent is a significant amount of money and a solid record of paying it on time in your credit report can dramatically raise your credit rating.

Future You Will Be Thankful

In order to have RentReporting.com coordinate credit for your rental payments it will cost you $9.95 a month (for as long as you want their service).  You may have doubts because it’s not free but you have to look at the bigger picture.  Say you were about to purchase a home for $250,000.  These days a great credit rating for a 30 year mortgage will net you roughly 3.375% where as an average credit rating will net you about 3.550%.  Over 30 years the difference  in your  mortgage will cost you $12,357, however for two years of credit history that helped you save over $12,000 it will only cost you $238.80.

Even better, RentReporting.com will log your previous two years of rental history for $34.95 basically allowing you to do one of two things.  Either save over 85% and only log your past two years (which would help you immensely)  OR go for something like 4 years of credit history making your rating extremely solid for a savings of 61% (if you go monthly for two years and get your prior two years logged).

Since you’re reading this, I’m sure you know how difficult it can be to build credit, especially good credit.  There are two things that are important 1) You don’t waste money on a service like RentalReport.com if you don’t think you need it and 2) You do the calculations for yourself and determine the most cost effective choice for you.

If you have bad credit or no credit, this $9/month can go quite a long way towards fixing your situation so definitely consider it.  The cost of bad credit is much higher than you think.

Have you tried RentReporting.com or a similar service to build credit without a credit card? Tell us about your experience in the comments!

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  • http://thecollegeinvestor.com The College Investor

    That sounds like a pretty good way to build credit. The hard part would be convincing landlords to do it.

    • http://www.listenmoneymatters.com Andrew

      I agree and I think the kicker is that for $9.95 they promise that they will get the landlord on board. I imagine they make it shamefully easy for them to verify payments or they wouldn’t have much of a business. I don’t rent anymore but I’m going to see if I can get my sister to do it so I can write about the landlord half as well.