How To Build Credit Without a Credit Card

There is no question that a credit card is a key to build credit. Credit cards are easy to use and provide certain levels of flexibility. Moreover, they even reward you for the cards. The credit score is directly dependent on the usage of credit cards and many people use them to build their credit profile.

But, how to build credit without a credit card? If this is what you are thinking, don’t worry. If you want to build a good credit history, there are lots of ways to do so. Here are some of the best and reliable ways through which you can build a strong credit history without having a credit card.


Many small institutions such as credit unions are likely to provide credit builder loans to help people build their credit history. The small amount that you borrow is kept in a savings or CD account and hold for some time. You have to make payments until the loan amount is paid off.

Also, you can access the funds along with the interest accumulated from the account. And, when the repayments are over in a timely fashion, you have built good credit all along. So, if you don’t have a credit card and need to build your credit history, this is the best way to start.


Whether you took a private or a federal student loan, you need to repay the amount. For a federal loan, you have to start making the payments if you have dropped halfway, left school, or graduated. For private loans, you have to repay the amount while you are studying most of the time.

It is a good way to build your credit history while you are in college and continue until you are a graduate. Making the payments on time help you built credit, whereas late payments make the situation unfavorable for you.


This is another great way to build your credit history. You can consider becoming an authorized user for your loved one’s account if the credit company allows. While you can use the credit card of the person, the owner is responsible for the repayment. And, the card’s activity gets reported on both of your credit profiles.

If the transactions are performed responsibly, you can build good credit. However, there are certain risks associated with it. If the card misses a payment or racks up a lot of balance, the activity would damage your credit regardless of whoever using the card. Both you and the owner of the card should be on the same page.


Car loans and mortgages report directly to credit bureaus. So, when you make timely repayments on either of them, it helps you to build a good credit history without the need to have a credit card.

However, the difficult part is getting approved from these types of loans without a great credit history. But if you are committed to making the payments on time, you might get approved sometimes. A steady income is a must. You can even consider someone with a good credit history to co-sign for the loan and get approval.


In general, it is seen that rental payments are not included in the credit reports. However, these days new services have surfaced to change the concept. As a result, whenever you pay your rent on time, it helps you to build credit without even having a credit card.

The easiest way to avail of this benefit is to register with a third-party service and it will add to your credit profile. So, continue to pay your rent and utility bills on due time. That way, it adds to your credit profile and helps you build credit.


These kinds of loans are issued by a group of investors or individual investors instead of a financial institution. The accrued interest goes to the investors. It might sound awkward, but peer-to-peer loans are legal unlike borrowing cash from your loved ones.

These loans accept borrowers with a low credit score compared to traditional lenders. However, the interest rates might vary depending on the lender. And, they could be much higher than personal loans.


Certain lenders provide unsecured loans to people with a bad credit score or no score at all. These kinds of personal loans involve borrowing an amount of money and repaying in fixed amounts every month. If you don’t have a good credit score, you are likely to be charged with a high interest rate.

However, if you manage a co-signer, the lender might approve the loan for lower rates. Never go for payday loans. That’s because they won’t help you build good credit history and you end up paying more in the long run.


While secured credit cards are less favored by people because a cardholder has to deposit cash well in advance, you might try for this option. In general, the deposited amount is equal to the available credit balance.

For example, if you deposit $200, you will be entitled to $200 in credit. And, if you deposit $700, you get $700 as credit. Secured credit cards allow you to buy things and make payments. You can even get some sort of bonus or cashback. Some companies increase the credit amount after the initial amount is paid on due time.


Never use all the credit available to you. In short, do not use more than the limit set by the credit card company. Exceeding the credit limit might hurt the credit score. So, manage your balances and don’t exhaust your credit card. Lenders get the impression that you are overleveraged.


Knowing how to build good credit without having a credit card is important. So, whatever option you would like to choose, you have to repay the amount consistently. And, avoid all kinds of financial obligations that make you default on your repayments.