So one of the biggest parts of building your finance or improving your finance is building your credit however, many find it hard to build credit because in order to build credit, you have to run your credit which harms your credit.
It's like a vicious cycle!
But credit is a necessary evil to help you become financially independent and purchase the things that you truly need, for example, a car, a house, and important things like that.
Getting a credit card is the only way that many know how to build credit, but for some, due to already having bad credit, it's nearly impossible to get a credit card without paying hundreds of dollars.
What are some tools you can use to build your credit without running your credit or without putting down a deposit (which is cash you probably don't have) to build credit?
Credit Building Tools
Aside from the usual ways to build credit, there are other non-traditional credit-building tools.
You may hear many people say don't use pay later services.
For example, Afterpay and Klarna are two of the biggest pay-later tools or pay-later services out today.
We've all learned that these services encourage you to spend money you don't have.
When a payment is missed, they immediately report it to the credit bureaus, thus keeping you in a vicious cycle by only reporting bad spending behavior.
So while they allow you to pay later, they in no way advertise are encourage positive spending behavior and building your credit.
But there has to be a better way!
And there is.
There are two pay-later services that allow you to build credit specifically. These tools are Prepay and Kickoff.
So what are Prepay and Kickoff, how do they benefit you, and why should you use them?
What is Perpay?
Perpay is an app that allows you to build credit while you shop.
So how does this work?
Perpay uses the information you provide, such as employment details and income, instead of a credit score to determine your spending limit and your repayment schedule.
Thus eliminating the need to run your credit.
You can only spend on the Perpay online marketplace, which allows you to choose from thousands of top brands.
Brands like apple, LG, KitchenAid, Keurig, UGG, MCM, Cricut, Dyson, PlayStation, and more.
What I love about Perpay is it doesn't encourage negative spending behavior.
For example, Afterpay and Klarna encourage you to spend money you don't have by offering you the option to buy now and pay later.
There really is no benefit to you using these services. They don’t report your on-time payments to the credit bureaus, but as soon as you miss a payment, it’s reported.
That’s so not cool.
However, Perpay helps you focus on a different goal, you are focusing on building credit, so you're spending with a purpose; the spending benefits you, not just looking for you to miss a payment to report negative behavior.
They automatically deduct the payments from the account you provide, so you don’t have to stress about missing a payment.
They also report your payment history to all three credit bureaus, Experian, Equifax, and Transunion.
So I recommend you not to spend what you don't have. However, pay in part to build your credit.
But my favorite thing about the service is that they do not run your credit to provide services for you.
Now the question I know your dying to ask is, Is it free?
Sign-up for Perpay free. However, to be a part of their credit-building program, Perpay+ will cost you $3 a month.
Still not bad if you're trying to reach your credit-building goals.
Another great credit-building service is Kikoff.
What is Kikoff?
Kikoff is another service that encourages you to spend with a goal. Building your credit.
They give you a revolving line of credit based on your provided information.
You’re limited to shopping in the Kickoff marketplace, with payments being automatically taken from the account you provide. You’re just making sure you have the money available.
Remember, don’t spend what you can’t pay. You’re using this as a credit-building tool, not to have extra money.
So, how much is this service?
Kickoff will cost you $5 for a credit account.
They allow you to use autopay to purchase the items, so you never have to worry about missing a payment.
With the credit account, Kickoff reports your payment history to two credit bureaus, Experian and Equifax.
They also offer another option for credit building through their $10 monthly credit building loan. This account can be added once you have shown positive payment behavior over time.
It reports payment history to Transunion and Equifax.
What I love about this service is that you do not accrue interest on purchased items.
Other Credit Buiding Ideas
Make sure that you have practiced good payment history and find someone that has good credit for this to benefit you.
Get credit for paying your utilities and rent:
Experian Boost is a program that tracks your utility and cellphone payment history and time payments count as positive behavior on your credit report.
Rent-reporting agencies allow you to use your rent payment history to boost your credit.
Major Take Away
These products are some great ways to help build your credit, hands down.
What I like most about them is that you don’t have to get a hard inquiry on your credit, which can hurt your credit.
Also, your limit is based on your income which is a great way to help you regulate spending and not go overboard.
But remember, don’t ever think of tools like this as extra money in your pocket. Think of them as tools to help you build your credit.
Spend with purpose and in a way that benefits you.