Is it possible to boost credit score without going into debt? Before we address this question, perhaps the first one should be, “Why would I need a good credit score if I intend to be debt-free anyway?” And that is a brilliant question.
Unfortunately, credit scores are used for more than just obtaining more debt these days. In fact, it can affect whether or not you are able to obtain certain jobs, discounts on your utilities and a few more reasons. We have outlined the reasons why in our previous article titled, “Why Having Good Credit is Important…Even for the Debt Free.”
So now we are back to our original question, “Is it possible to boost credit score without going into debt?”
The short answer is, “Yes.” The long answer is, “Yes, but it will take longer.”
Although it will take longer, you will have peace of mind that you did not have to obtain debt, which can ultimately lead to an unsettled, stressful state of mind and a lot more work to reach your financial goals.
Let’s dive right into how you can build your credit score without obtaining more debt.
How To Boost Credit Score Without Going Into Debt
Have your rent reported to the credit bureaus
The first critical step is to set-up a reporting service that will report your rent to the credit bureaus. Obviously, don’t do this if you have been behind or late on your rent. It will be pointless. However, if you have been paying on time for at least 6-months, it’s an excellent idea to have these timely rent payments reported.
You can possibly do this for free by asking your rental agency or landlord to report your rent to the three credit reporting agencies (TransUnion, Experian and Equifax). If they can’t do this, then consider using services like
If not, you can sign up on your own through a rent payment processing service that will report to the three agencies on your behalf through services like RentTrack.com. RentTrack will process your rent payment and report your payment history on your behalf.
Request that other monthly recurring bills (like utilities) are reported to the credit bureaus
Along the same lines as your rent, you can also directly request and ask your monthly recurring bill providers if they would mind reporting your stellar payment history to the three credit bureaus. This is going to be a different process for each type of recurring bill provider, but provide what they need for them to report with ease.
If you are wondering what types of bills count, these would be things like your cell phone bill, your cable bill, electric bill, etc. You may even find the answer to whether they will report your payments for your on their websites. If not, call and explain your situation and that you are trying to build credit without going into debt and you need your regular bills reported. Please note, they are not required to do this, so it is merely a free service, so be as kind as possible and helpful to set it up!
Pay current, outstanding debts on time ALWAYS and even a little ahead of time
If you have any amount of debt outstanding that you are working on paying off, including a mortgage, this alone will boost your credit score over time. You need to be focused and pay close attention to make timely payments on any current outstanding debt because a late payment on any current debts will be much more difficult to recover from than not having any credit to work with.
Consider a credit card for use as a debit card
We are going to make this last recommendation with extreme caution. It certainly is possible to obtain and use a credit card as a debit card, meaning you pay it off every single month in full, never carrying over a balance and never paying a dime of interest. However, this is not a recommendation for the faint of heart. If you have any outstanding debt currently, this is not necessary to build credit. Please don’t consider getting a credit card unless you are completely debt-free and have lived a debt-free life for some time, so that the debt-free life is your lifestyle and your habit.
With that, if you are in a responsible financial place, stay in budget, don’t get carried away on spending, using a credit card as a debit card can be smart on many levels, including building credit fast! One of the tips that we have heard is that the American Express line of cards is one of the best to build credit the fastest. Plus, the rewards can be great and you can make money on a credit card if you pay all of your bills with your credit card, pay it off before interest hits and reap the massive rewards (like free travel). The one thing to be aware of is the annual fee. You need to research and decide if the annual fee is worth the rewards and building credit history. In some cases, it’s not worth it. In other cases it is.
One example that we know if that the annual fee may be worth it is the Delta American Express. You can build skymiles for free travel (eventually and much slower than a traditional credit card user, but an eventual free flight trip is nice) while builidng a nice credit history. But, they do have an annual fee of $195. However, in this case, that may be worth it if you travel by airplane at least once a year because along with that $195 annual fee, you also get a free companion plane ticket. Since most plane tickets will be over $200, this could be an option that is worth it.
As there are so many credit cards, so many offers and so many rewards, do a good amount of research to know which ones to get…but again, ONLY if you are debt-free and have a good budget and spending record for quite a while. Otherwise the temptation of a credit card and the debt you could find yourself in completely defeats the purpose.
Check credit report annually to correct any mistakes or misreporting
Finally, you will want to check your credit reports yourself at least annually. This is important because you can report and fix any errors, make sure no one is using your identity/credit, and keep track of what is going on. Simple fixes can raise your score a little and so it is worth checking regularly!
As a consumer, you are entitled to one free credit report per year.