Need to create credit without a bank account or credit card?

In today’s world, having a bank account is the norm. Although this is not the norm for everyone. A lot of people don’t have a basic checking account – some by choice and some not. For those looking to build credit, it’s hard enough without a credit card, but not having a bank account makes it a bit more difficult.

Bank accounts don’t directly improve your credit score, but bank cards do create credit. For example, a checking card attached to your bank account usually has a Visa or MasterCard logo and can be used as a credit or debit card. People use bank cards to make electronic payments that are reported to credit bureaus, such as utility bills and car loan payments.

Without access to a bank account, you do not have access to a bank card and the process of building up credit can be tedious. Although it requires additional steps, you can create credit without a bank account.

Put reportable payments on a prepaid credit card

To create credit, you need to start making payments that are reported to the credit bureaus. These types of payments generally have to be made electronically. If you don’t have a bank account, you’re probably used to dealing with cash. However, with a few exceptions, cash payments will not increase your credit.

Prepaid credit cards are your best friend

You need credit to get a credit card and you need a bank account to get a debit card. However, credit is not required for prepaid cards and you don’t need a bank account either. All you need is cash to buy and load the card.

In terms of building an on-time payment history, credit bureaus don’t care if you pay your bills using a credit card, check card, or prepaid credit card. If you pay your reportable bills on a prepaid credit card, it will still show up on your credit report as having been paid on time and in full (provided you actually pay on time and in full).

Specific invoices to put on your prepaid credit card

Use a prepaid credit card to make all purchases that are reported to the credit bureaus, like your cell phone, electricity, internet, etc. If you pay cash for some invoices, your payments might not be reported. It all depends on the type of payment and whether or not you are paying in installments or whether it is a one-time cost. For example, if you pay for a car in cash, your payment will not be reported. However, if you take out a car loan with bad credit, your monthly payments will be reported to the credit bureaus.

If you’re not good at managing your finances or tend to overspend, use a different prepaid card for each payment (if you can). For example, separate the card used for car payments from the card you use to pay household bills. Do not carry these cards in your wallet. This way, you don’t risk overspending when you go out shopping.

If your landlord doesn’t report your rent payments to the credit bureaus, ask them if they would consider reporting yours. There are rules that require homeowners to receive a certain number of payments each month in order to report positive payments. However, landlords may pay a fee to report less rents.

Normally, landlords give small discounts for electronic payments, but if your landlord isn’t budging and you really need your rent payment to account to increase your credit, offer to pay a small fee. It doesn’t hurt to ask.

Prepaid cards aren’t the simplest, but they do work

You can buy just about anything with a prepaid card that you can buy with a debit or credit card. However, a prepaid card must first be charged. This means that prepaid card users have to go to the bank with cash in hand whenever they want to load or reload their prepaid card.

When you’re working to build a better credit score, don’t let the extra steps get in your way. Soon you will have the credit you need to open a bank account and you can start doing things with ease. You might even be able to get a secured credit card from your bank and start small with a balance of $ 300.

If a prepaid card is your only option, waste no more time – start building your credit today.

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