5 Ways to Build Credit Without Spending Money

Want to build your credit, but know you can’t afford buying things on credit right now? Congratulations on having a responsible outlook on how debt works. We have some good news: You can do some things to improve your credit without spending money.

1. Get Added as an Authorized User

person looks at paperwork with a friend as they get added as an authorized user

You don’t even need your own credit to build credit or positively impact your score. You can piggyback off of someone else’s account. It’s known as becoming an authorized user, and it works like this:

  • You ask someone with a credit card account in good standing to add you as an authorized user.
  • Double check that their credit card company reports payment history for both the owner of the account and the authorized user.
  • Their credit card company should start reporting their account information on your credit report.
  • As they manage their account well — making timely payments and keeping credit balances low — you get the benefit of the positive information on your report too.

Pros: You don’t need any sort of credit history, and you don’t have to spend any money.

Cons: If you’re an authorized user and someone misses payments or runs up their credit card balances, it could negatively impact your credit score.

2. Use Automated Tools Like Autopay

“payment success” displays on a mobile phone after a person decided to use automated tools like autopay

One of the best long-term ways to care for your credit is to make all payments on time. But life is unpredictable, and it’s easy to get busy or get caught up in drama for a week or month and forget to make a payment. Setting up automated payments mitigates that risk.

Pros: You can set and forget your payments (for the most part) and still know they’ll be paid on time. Those timely payments get reported to your credit history and can positively impact your score.

Cons: You must ensure you have available funds in the accounts you’re using to make autopayments. You also won’t have as much wiggle room in adjusting when and how you pay your bills to make the most of your monthly income. 

3. Dispute Errors on Your Credit Report

a credit report dispute form — where you dispute errors on your credit report — sits on a desk

Inaccurate negative information on your credit report can bring your score down. Errors can range from simple typos to entire accounts showing up that aren’t even yours. It’s a good idea to review your credit report periodically to ensure everything is correct. You can get a copy of your report from each of the three major reporting bureaus from AnnualCreditReport.com

Review the entire report and look for anything that may not be correct. Dispute the inaccuracies by writing a letter to the credit bureau in question. You should:

  • Include a copy of your credit report with the inaccurate information circled
  • Provide a short but comprehensive explanation of the inaccuracy 
  • Attach any documents illustrating your side of the story
  • Ask the credit bureau to investigate the matter and either delete or correct the item

You can mail your disputes to:

  • Equifax Information Services LLC; P.O. Box 740256; Atlanta, GA 30348
  • Experian; P.O. Box 4500; Allen, TX 75013
  • TransUnion LLC Consumer Dispute Center; P.O. Box 2000; Chester, PA 19016

Pros: You’re actually afforded a fair and accurate credit report under federal law. The Fair Credit Reporting Act requires the credit bureaus to investigate any reports of inaccuracy in a timely manner . And if the reporting entity — usually the creditor — can’t provide documentation for the information, the credit bureau has to fix it or delete it. This makes a dispute a fairly easy way to correct his type of issue.

Cons: You’ll likely only be able to successfully dispute items that are truly inaccurate. It does also take a little bit of time and research effort.

4. Keep Old Accounts Open

credit cards are sticking out of wallet, showing that you should keep old accounts open

Credit age plays a role in your credit score. Credit age refers both to how long you’ve had credit in general and to the average age of your open accounts. Closing an account changes that average age, which can impact your credit score.

Consider this example to understand how it might work:

  • Sue has a loan that’s five years old, a student loan that’s 15 years old, and a credit card that’s 10 years old. The average age of her accounts is 10 years old.
  • Sue gets a better credit card offer, so she opens a new account and closes the old one.
  • Now, Sue has a loan that’s 5 years old, a student loan that’s 15 years old, and a credit card that’s 0 years old. The average age of her accounts now is 6.67 years old.

However, if Sue had kept her old account open, she would have four credit accounts with ages 5, 15, 10, and 0. The average age is 7.5.

You can’t always keep accounts open, obviously. If you pay off a car loan or personal installment loan, those accounts may automatically be closed by the lender. But you do have a choice with some credit line and card accounts, so consider the credit age consequences before you close them.

Pros: It doesn’t take much work to keep an account open. You simply don’t take action to close it. You may also have to use the card periodically and make a statement payment to keep it active.

Cons: Leaving multiple credit card or credit line accounts open can make it tempting to buy things you couldn’t otherwise afford. That can lead to large and expensive debts. Avoid using this tip if you know you won’t be able to avoid using the cards. 

5. Ask for a Credit Limit Increase on Existing Credit Cards

“approved” is stamped over a piece of paper labeled “increasing credit limit,” which can happen after you ask for a credit limit on credit cards

Another factor in your credit score is called credit utilization. This refers to how much of your total credit limit you’re using. If you have a credit card limit of $2,000 and you have a balance of $1,500, your credit utilization is 75%.

The higher your credit utilization, the more of a negative impact it can have on your credit score. Paying down your balances is one option for addressing a high utilization rate. But if you want to make a quick positive change without spending any more, you could also ask for a credit limit increase.

If you’re an account holder in good standing and you have decent credit, your card company might be happy to grant such a request. If you have a higher limit, you automatically have a lower utilization rate.

Pros: This tip only requires you to spend a bit of time on the phone with your credit card company.

Cons:  Most credit card companies will require good credit. And, as with the tip above, you open yourself up to the risk of incurring more debt. Avoid this tip if you know you will only run your card balances up to the new total.

Bonus Tip: Apply for a Loan With Wise Loan

a couple talks to a loan officer about how to apply for a loan with Wise Loan

You don’t need great credit to get approved, but Wise Loan reports timely payments to two of the three credit bureaus. That can help you improve your credit. And you don’t have to spend any money. Simply hold the funds from your loan and use them to pay back the loan! Apply for a Wise Loan loan today.

The recommendations contained in this article are designed for informational purposes only.  Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.

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