How to gain credit without using a Credit Card

You will hear it many times, you want to gain credit… go get a credit card. But sometimes getting a credit card is very over whelming especially if you have previously had a bad experience with a credit card or if no one ever taught you the proper way to use it. People say credit cards because it is usually the easiest way, but not always the best. 

With all of the items listed the main thing to remember is to PAY YOUR BILLS.

Now if you were looking to gain credit without a credit card, I would look to see if you currently have a personal loan, auto loan, student loan, telephone bill, line of credit or mortgage that is in your name.

Even if you have a line of credit, it doesn’t show up on your credit report until you start using it, so I would recommend that you use $20.00 of it, keep it out for a couple of days and then pay off your line of credit. Now remember unlike a credit card a line of credit charges interest RIGHT AWAY. 

Getting an auto loan means that you are usually financing a vehicle from a dealership, it is not a good idea to increase your payments on your loans while looking at purchasing a home because as a broker we HAVE to use the payment that shows up on your credit report which might be the larger payment. This could be the difference between you qualifying for your home or not. The same goes for Student Loans, which is usually given when you are going through school. Personal loans also follow the same guidelines and they are usually given through the bank.

Also, important to note that not all banks are the same. Some banks report on Transunion vs. Equifax so please let your broker know all of your current liabilities, so they can find the best mortgage lender for you. For example your credit might look better on Transunion vs Equifax so I would want to find a lender that will use your Transunion report instead of your Equifax report. It is also important to note that not all mortgage brokers are the same one of the main differences between us, is what lenders we have access to.  

Telephone Bills do help you gain a score which is very important if you have recently moved to Canada but you usually wont be able to qualify for a mortgage on your own. You would need more credit history than that.

When it comes to rebuilding to just building your credit, lenders like to see a minimum of two-year history. So just because you don’t plan on buying a house in the next 6 months to a year, it is always good to know if you are on the right path now vs when you find the perfect house.