your Credit score It is one of the most important numbers in your financial life. This is a key factor in whether you are approved on a loan and credit line, along with the interest rates charged. This has become even more important over the past few years as the Federal Reserve raised interest rates to combat inflation and lenders tightened their underwriting standards in response to increased arrears.
Unfortunately, according to Equifax, there is little credit history that is rare for 76 million US consumers.
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How to calculate your credit score
There are several different details that will calculate your whole Credit score – The lender will use it to determine your creditworthiness.
FICO (Fair Isaac Company) has created the most widely used credit scoring formula. Your most important factors FICO score This is your payment history, which accounts for 35% of your score. Then how much you owe (30%). Credit use; Credit history length (15%); Credit mix (10%); and recently applied credits (10%).
In general, it is best to pay your bills on time, keep your debts low, and show that you can successfully manage various types of credits over the long term (without applying for credits quickly). These are habits that can help you Build and maintain great scores.
Credit scores are widely used by lenders and are generally considered to be a reliable predictor of whether a borrower will repay his financial obligations in a timely manner. Credit scores are similar to a standardized test score for students, such as the SAT scores in the University Application. But just as some people feel that standardized tests are not an accurate barometer of academic proficiency, their credit scores also have detractors.
Why some people scream fouls about credit scores
One of the most prominent deniers of credit scores is bestselling author and anti-debt crusade Dave Ramsey.
As his organization’s website states, “When it ties to everything, the credit score is really a ‘I love debt’ score. That’s right, a “good score” simply indicates that you’ve played your actual net worth or don’t reflect the amount you have at the bank.
While there Some truth Some Among these statements, there are also some questionable claims worthy of deeper investigation. Most importantly, it is entirely possible to build a credit score without any debt.
How to increase your credit score without debt
Let’s face it: you’re not going to take it Car loan Or a mortgage Just to build credits. These are key financial obligations and, in addition, they cannot even be approved if they do not have an appropriate credit history. However, there are other ways to build credit without undertaking a substantial amount of debt. actual, Right credit card And a proper payment habit allows you to build a credit without paying any interest or fees.
This can help you in many ways, from purchasing power to the advantage Credit card rewardsconvenience, and hopefully a better credit score, you can buy a house or car somewhere. Even if you don’t expect these types of purchases right away, a strong credit score can help you secure an apartment lease and avoid placing large deposits for utility or mobile phone services. Some employers may even review their credit reports.
Credit Card
Credit cards can help you build your credit as long as you use them responsibly (meaning you pay on time and keep your debts low).
As long as you pay your balance for each billing cycle, you can avoid interest. But it’s different from Debit cards and credit card usage will count towards your credit score. Of course, there is a reason some people say that credit cards are like power tools (also, they can be really convenient or dangerous). If you’re nervous about spending too much debt and carrying it, there’s a way to use your credit card on the guardrail.
Credit cards are technically a type of loan, but as long as you pay the full amount each month, you will be interest-free credit. Additionally, credit cards offer valuable rewards programs and buyer protection, representing a safe way to make the purchase you would have purchased anyway.
Starter Credit Card
Student credit card, Secure credit cards and Retail Credit Card This is because a typical entry point into the credit card market tends to be more entitled than other credit cards. However, be careful not to over-expend, as these products can have high interest rates and are able to earn significant debts.
These and others Starter Card Although there are often low credit limits and limits the possibility of debt, many of this available credit can also be used easily (this is not good for your credit score). Back to Power Tools Analogy, it’s about how you use them.
Credit cards with cash flow underwriting
tomocreditfor example, provide a Tomo credit card*. This is a great starting point for many people. It works with MasterCard Network But unlike most credit cards, it’s a Charging card (Therefore, balance is not permitted). In fact, it works with a 7-day payment cycle (most credit cards have a monthly billing period). This full short-term salary structure helps limit the risks of the company and cardholder.
Tomocredit’s practical cash flow underwriting. This means that the company is not dependent on credit scores. Instead, we will take a detailed look at the applicant’s bank account to see how much money is in each month and how much money will be paid. That target audience is immigrants and young adults who may not have a FICO score because they are new to credit (at least in the US) but manage their finances responsibly. For example, by spending less than you earn every month.
Sign up for a Tomo Card ($2.99 a month) or sign up with the company Tomobust Programs – A wise way to start your credit journey. Use of the cardholder account will be reported to everyone Three major credit bureaustherefore, responsible payment habits build credits without accumulating debt. Tomocredit can offer much higher credit limits than secured cards (credit cards that require deposits).
While there are potential benefits to having more available credits, such as expanding your purchasing power, those who are nervous about overexpenses may find a safe card a safe starting point.
Certified Users
I also like the idea of getting a credit card account for a parent or relative Certified Users. This allows you to jump your credit score without any drawbacks. Because you can remove yourself from your account whenever things get sour (for example, if your primary account owner is late or you’re in too much debt). The primary account holder is responsible for making payments in this arrangement.
If you are a certified user with an account with a positive payment habit, they will be translated to you. So this is a low-risk, high-reward tool for building credits. Two of the biggest obstacles to building credits show that you have your account approved and can manage it successfully over time. Once added to a well-established account as an authorized user in good condition, you will be better positioned to overcome those hurdles and earn credits in your own name.
Other non-surviving ways to build credits
Of course, credit cards are not the only way to build credit, but they are the most popular (three-quarters of the US have at least one credit card, according to Bankrate’s 2025 Credit Card Debt Report). The financial world is constantly evolving, and there are currently ways to gain credit on new financial obligations such as streaming services and mobile phone plans, literally, through credit reports.
Alternative Credit Monitoring Program
Alternative credit monitoring programs such as Experian Boost (For consumers who have some credit info on their files, even if they have negative or thin credit files), Experian Go (for consumers who have no credit info on their files), and Ecredable Lift are great ways to build credit based on what they’re already doing. Experian offers (which affects Experian credit scores only) start at $9.95 per month for free, aspirationable lifts (reported only to Transunion).
These programs incorporate existing payments, such as rent, utilities, and streaming subscriptions, that were not previously counted in your credit score, into your credit report. Sign up can draw a lot of useful information that can jump your credit score very quickly.
Credit Builder Loan
Some financial institutions offer it Credit Builder Loan. These are essentially a form of forced savings. You can put aside your money every month (often 6-24 months), then keep most of it at the end of the semester. Although there are usually several fees, these loans can be a low-risk, debt-free way to improve your credit score and save money at the same time.
Kikov
Kikov It is a credit building platform (similar to the TomoBoost program mentioned above) that allows users to build credits without credit checks. A small monthly fee will allow users to access a credit line that they report to major credit bureaus. The cheapest option is just $5 to keep your credit line active at $750 each month. Basically, it’s a gimmicky way to create a “loan” from thin air. You can have this available credit and use it very little. The credit scoring algorithm doesn’t look good.
Conclusion
At some point, almost everyone will be on the market for a loan or credit line. It could be something else, such as student loans, mortgages, car loans, credit cards, etc. Credit check It is also common to certain obligations that do not involve debt, such as renting an apartment or signing up for utilities and mobile phone services. Some employers may even check credit reports of future employers.
Having a strong credit score can open many doors, but a low or non-existent score can lead to many rejections. necessarily Monitor your credits Consider regularly following these steps to improve your credit score without breaking your bank.
Have questions about credit cards? Email me to [email protected]. He will be happy to help you.
*Information about Tomo credit cards is collected independently by the Bankrate and not reviewed or approved by the Issuer.
