Many people might believe that to get a good credit score, they need a checking account. For households conducting most of their financial transactions with money orders and prepaid cards, it might seem essential. But financial expert Jeff Richardson says that having a checking account isn't necessary.
Talking about the myth, Richardson said, "It's probably a little bit harder to get credit initially and maintain it, but you can build good credit without a checking or savings account as long as you use those credit products responsibly."
For those without a checking account, financial management might be a little more difficult, so there are some important things to look out for. Being late with bill payments can have a negative effect on credit scores - payment histories contribute up to 35 percent of a score. Therefore, it is essential to stay on top of bill payments, making sure they are paid early or on time. For large loan applications such as mortgages and auto loans, most lenders will want to review your financial history. For those thinking of applying for such credit in the future, it is a good idea to build a relationship with a bank as a way to improve the chance of having applications approved.
It's always a good idea for consumers to keep an eye on their credit, but this is even more important for those without a checking account. It allows individuals to understand where their credit stands, which is particularly important ahead of loan applications.
You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.