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Using a credit card—responsibly—is the most common way to build up your credit history and boost your credit score. But if you’re wary of hitting the plastic, we hear you. After all, plenty of people struggle to keep credit card debt under control. As of the second quarter of 2021, South Africans have racked up a whopping R242 billion of total credit-card debt, an increase of R14 billion from the year before. Of those balances, 13.8 percent have entered delinquency, meaning that payments on them have become 90 days or more past due.

If you fear becoming a credit card delinquent yourself and would rather avoid the risk, you can still work on establishing a solid credit history and top credit score. Here are strategies to consider:

Focus on replaying your student loan

Unfortunately, odds are you’re carrying some student loan debt. 

The thin silver lining to that cloud of debt: Repaying your student loan counts on your credit report. So if you make all those payments as scheduled, your credit score should benefit. If you have any other type of debt, such as an auto loan or personal loan, making those payments, in full and on time, can help you establish and boost your credit score, too.

Note though that your credit mix, i.e. the different types of debt you carry, is factored into your credit score. Student, auto and personal loans are typically classified as installment loans. So only carrying this kind of debt wouldn’t help increase your credit mix score. Using a credit card, which is considered a revolving loan, would help mix up your credit. Then again, credit mix only accounts for 10 percent of your FICO score—by comparison, payment history (i.e. making payments on time) counts for 35 percent of your score—so you have to decide whether it’s worth worrying about.

Report your rent

Paying your rent doesn’t usually go on your credit report—but it can. You can ask your landlords if they report rental payments to the credit bureaus. 

Again, whether this helps or hurts your credit score depends on you. If you always pay your rent on time, that’s great. But if you miss a payment here and there, your score will suffer.

Consider a secured card

Yes, a secured credit card is still a credit card. But it lacks the big risk you’re probably most afraid of when it comes to using a credit card: the ability to overspend. The way it works is you put in a deposit, say R2000 to R10,000, and that’s usually your credit limit. So you can’t really go on some crazy shopping spree with a secured card.

Besides that, these cards work pretty much the same way traditional credit cards do. The lenders report your activity to the credit bureaus, so paying your balance in full and on time adds to your credit score. If you carry a balance, you incur interest, typically at higher rates than unsecured cards. You also have to watch out for annual membership fees and other charges. But on the bright side, if you leave your card in good standing, you get your deposit back.

All of these strategies can work well to help you build your credit, as well as develop good financial habits. Once you’re able to handle one responsibly, you can not only boost your credit score, you can also snag discounts and earn rewards.

In the meantime, it’s smart to not take on more debt than you can manage. And now you know, skipping the plastic does not have to bar you from developing a solid credit history and building a fine financial foundation.


How to build credit without a credit card?

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