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How to build good credit?

I don't own a credit card, and I don't want one. So how else do I build good credit? I have NOTHING on my credit... I am told that is about as bad has having bad credit, you can't get loans or anything. I would like to get a house in the next 5 years, but I would like to start some where. Thanks!

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Asked by Anonymous at 8:40 PM on Dec. 14, 2009 in Money & Work

Answers (26)
  • Someone told me once that car loans-- secured debt that is paid back quickly-- are a good option. I don't think spending a lot of money is the best way to build credit.

    If you can join a credit union, they often have financial advisers there who will work with you for free.

    I did mine with student loans.

    My mother built her credit young with a credit card at Phillips 66 gas station. She bought all of her gas with that station on that card and then paid it at the end of every month, never a penny of interest. Now she is a real estate investor.

    Answer by ecodani at 8:44 PM on Dec. 14, 2009

  • Just paying monthly bills on time(Electric, cell phones etc) is a way to build a reputation. When you go to get a loan for a home if they can see you pay your bills on time and have a steady income(usually at the same job for 2+ yrs) then they can manually underwirte it for you. You dont have to have "credit" or credit cards to get a home.

    Answer by My_3_Babies at 9:14 PM on Dec. 14, 2009

  • DO NOT GET CREDIT CARDS! Have you heard of Dave Ramsey? Check out his website.  It this has tips for buying a home.     Many people start out with good intentions and "I'll pay it off at the end of the month" mentality but never do, or something comes up. Then it just rolls over month to month. He has companies listed on his site, or you can call and get them that will use other types of references other then a credit score to finance a home. Here are a few of the other options besides a credit score, but check out his website for more.  

    *You pay your landlord early or on time *Same career field for 2 years*You have a good down payment*You have no other credit good or bad,* You aren't trying to a make too big a loan (less than 25% of your take home pay).  He also has a 100% down plan.


    Answer by Dakee at 9:23 PM on Dec. 14, 2009

  • If you have money SAVED, there's your credit.. if you pay your bills on time, you've got 'credit'... don't get a credit card or other kind of loan.. it's NOT worth it.


    Answer by Craftymomof3 at 10:03 PM on Dec. 14, 2009

  • Utility bills (electric and water) and cell phone bills are great ways to build your credit. The companies check your credit before granting you service. So, as long as the account is in your name with your social security number, and you pay on time every month, your credit will "build."

    Answer by LainieFekula at 10:26 PM on Dec. 14, 2009

  • I agree with the above three posters...
    Save cash for your house now-- a 20% down payment, good job history, paying all your other bills on time- and going to a bank that knows how to underwrite a loan, and you'll be able to get a mortgage WITHOUT a credit score. Plus you have none of the risks that come from getting in debt.

    Check out the Dave Ramsey group on CM for more info. :)

    Answer by Anonymous at 11:13 PM on Dec. 14, 2009

  • Sorry, payment history with utilities and cell phones is not reported to credit bureaus and does not build credit. On the other hand, if you don't pay those bills and they send you to collections, that does go on your credit report.

    You don't have to have a credit card to build credit, but it helps. If you pay your credit card balance in full each month, you can build credit for free. Credit and debt are not the same thing. You don't have to go into debt to build credit. Installment loans like auto and student loans also build credit, but they will cost you in interest. Recent article on MSN Money:

    I definitely agree that talking to a financial advisor at a credit union is a great idea. The credit union I work for also offers free seminars on a variety of topics like building credit and understanding credit reports.

    Answer by atigergirl at 12:10 AM on Dec. 15, 2009

  • Frequent, responsible use of credit cards is the fastest way to build a good history. Something like always filling up your gas tank and then paying it off each month is great.

    Answer by Anonymous at 12:30 AM on Dec. 15, 2009

  • First of all, find Dave Ramsey. He will explain to you "WHY" you don't "need" credit. There is a great group here on CafeMom, he has a website,, a radio show, a tv show and you can get his books at the library. My family lives debt free and without credit cards, but I'll give you the example of my parents. They don't have a credit score. Not good, not bad, nothing at all, just no credit history period. They save their money for the things they want to buy. They live within their means and then some. They have an emergency fund for situations when most people would whip out their credit card. They own 2 houses and 4 cars. They paid cash for them. It is NOT impossible to do. The most important part of this is that their annual income between the two of them has never been over $30k a year. Dave Ramsey explains best getting a home loan without a credit score, if you need one.

    Answer by slw123 at 8:24 AM on Dec. 15, 2009

  • Nothing wrong with credit cards if you are responsible. I have had them since I was a teen and always paid my balance in full before paying any interest or finance charges. I have a near perfect credit score. Car loans show up and you can get letters of credit showing you paid your utilities on time since they don't show up on your report unless you don't pay them. Credit cards are not evil and they don't force anyone to use them. People make a choice to run up debt and some have no self control. Responsible people have them and never run up debt they make the cards work for them getting miles or points for gift cards like I do. Dave Ramsey is an f-ing hypocrite he has a way for people to buy his system using a credit

    Answer by Anonymous at 9:54 AM on Dec. 15, 2009

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