Responsible credit without using debt!

Not everyone wants to utilize debt as a way to build credit responsibly, but most advice available on building credit relates to taking out a loan, or using credit cards to prove good payment history.
As a financially savvy and responsible spender, how are you going to establish or rebuild credit without leveraging debt to do so? Below are three smart but unconventional ways to build credit without using debt. 
Pay Your Rent
One of the main ways to build a solid credit history is to use an online service to pay your rent each month. William Paid is one of the many services available that reports your payments to the top credit agencies.
As long as your monthly payments are consistently paid on time, you can use it as an alternative way to build or rebuild your credit.
                                   
Get a Secured Credit Card
Don’t worry, a secured credit card works differently from a traditional unsecured credit card. Instead of receiving a line of credit from a credit card company and having the temptation to max out the limit, a secured credit card requires an up-front deposit that becomes the card’s credit line.
Your cash is used as collateral against the purchases made on the card, so it’s more difficult to get into credit card debt.  

Your account will be reported to the major credit bureaus, just like a traditional credit card, and help build credit more responsibly while avoiding accumulating debt.

Pay Bills on Time 
The most responsible way to build credit is to pay all of your bills on time. This includes things like rent (mentioned above), utilities, cell phone bill, cable/internet bill, etc. Start by getting at least one type of bill in your name and make consistent on-time monthly payments. 
They allow you to establish credit in alternative ways by simply paying your bills. Aside from the traditional utilities bills, this can include payments for medical bills, tuition, day care, and more.
They create a report that tracks payment history, which can be used when applying for a loan at a financial institution. It’s a little unconventional, but living a debt free lifestyle is worth the out-of-the-box thinking.

Build Credit Without Using Debt
You don’t always have to use debt products to build credit and establish a good history of paying bills on time, it just takes a bit of unconventional thinking.
Use these three ideas to prove a good history of credit and up your creditworthiness in a responsible manner, and watch your credit score increase the right way. When you’ve been in debt, and worked towards paying it off, the extra time and energy is definitely worth a debt free lifestyle.

Source: Secondary

Why you should teach your child about paying with plastic?

When you think about what to teach your kids about money, chances are that credit cards aren’t high on your list of necessary lessons. In fact, many parents would just as soon not teach their kids about paying with plastic. However, well-intentioned that approach might be, the reality is that your child probably needs to know how to interact with plastic if he or she is going to grow up to be able to handle money appropriately.

Help your child understand debit and credit

You don’t need to encourage your child to use credit cards and get into debt in order to help him or her understand the appropriate use of plastic. It’s a good idea to approach the subject, though, and let your children know that there is a difference between debit and credit, and that they should avoid debt. Introducing them to plastic during their teen years can help them prepare for a world that increasingly does not make use of cash or check.
Talk about the difference between debit and credit. When you swipe the card, it comes from money you already have. Also talk about how credit is different; it’s a loan. You are using money you might not have. In either case, the important thing is to encourage your child to keep track of what he or she spends using plastic, and encourage your child only to spend money he or she already has.
                        

Learning to manage plastic

If you can get your child a debit card attached to a joint checking account, you can begin to help him or her learn to track his or her spending while using plastic. Because spending with plastic (whether it’s debit or credit) tends to encourage less mindfulness, getting your child in the habit of tracking spending is a big step forward.
In some states, you can get a debit card for your child when he or she is 16 years old, as long as it is for a joint account. Other states and banks, though, may not let minors get debit cards. If this is the case, a prepaid debit card isn’t a completely terrible idea. Look for a card that doesn’t charge outrageous fees. 
When your child uses any sort of plastic, make sure that he or she records what is being spent. You can use pen and paper, or you can use personal finance software on the computer. I’ve already got an account set up for my son in our personal finance software so he can see where he stands, and keep track of where his money is going.
Plastic (or, more likely, payment via cell phone) is the wave of the future. Teaching your children to manage their money in a world where they aren’t likely to count out cash is an important skill. That way, they can learn to pay attention to spending, and avoid the pitfalls of plastic later.

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Source: Secondary