Home > Credit Score > 9 Ways to Build Credit Without a Credit Card

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UPDATE: Article Updated by Brian Acton 3/9/18

Credit cards are one of the best tools around for building credit. They’re easy to use, offer flexibility and (sometimes) rewards, and they directly affect many aspects of your credit score.

But you may want to build credit without the help of a credit card. Maybe you have trouble managing credit cards, or you simply don’t want one cluttering your wallet. Whatever the reason, there are other ways to build a strong credit history.

Here are nine ways to build credit without a credit card.

  1. Authorized User Status

If you have a close friend or family member with a credit card, you could ask if they would be willing to add you as an authorized user. Authorized users can use the primary cardholder’s credit card and piggyback off their credit card activity. Even if you never use the card, card activity can still be reported to the credit bureaus and used to boost your credit.

This method comes with some risks, as your credit report will reflect how the card is used. If you or the primary cardholder racks up an excessive balance or misses payments, that activity could end up damaging your credit. It’s important that both you and the cardholder trust each other to use the card responsibly.

Make sure to verify with the credit card company that they report card activity for authorized users; otherwise, you’ll be wasting your time.


  1. Credit Builder Loans

Credit unions, banks, and other companies sometimes offer credit builder loans to help borrowers build credit. Typically, you borrow a small amount (often $1,000 or less), which is put into a CD or savings account. You make payments for a set amount of time until the loan is paid off, at which time you can access the funds. Basically, you’re paying off your loan ahead of time.

These loans often have low interest rates and are accessible to those with poor or nonexistent credit.

  1. Passbook or CD Loans

Banks sometimes offer existing customers passbook or CD loans, which are secured using the balance you already have in a CD or savings account. You build credit as you pay down the loan, and you can access your balance again once the loan is paid off.

  1. Federal Student Loans

Federal student loans show up on your credit report, and if paid on time can help you build a positive payment history. Of course, the opportunity to pursue a degree is the main draw. Taking on student debt just to build credit is a bad strategy.

  1. Peer-to-peer Loans

Peer-to-peer (P2P) loans are made by individual investors instead of traditional financial institutions, with the accrued interest going back to the investor. And, unlike borrowing money from your sketchy cousin, P2P loans are completely legitimate and can be set up through a reputable P2P service.

Credit requirements and interest rates will vary depending on the lender.

  1. Mortgages

If you’re looking to build credit, you may not be ready for homeownership yet. But if you have (or are considering) a mortgage, you should know that it could help your credit. Your credit score may take a hit when you first assume a huge debt, but it will rise over time with regular monthly payments.

  1. Auto Loans

Just like mortgages, auto loans can help you secure property (in this case, a car) and give you the opportunity to build a positive payment history.

  1. Personal Loans

Some banks still offer unsecured personal loans, in which you borrow a fixed amount of money and make fixed payments every month. Personal loans are often used to consolidate debt and pay it off at a lower interest rate.

  1. Rent

Most credit reports do not contain entries regarding your rent payments, simply because landlords don’t bother reporting that activity. But credit bureaus will incorporate timely rent payments into your credit report if that information is submitted to them. If you are evaluating a rental or you currently rent, you should ask the landlord if they will report your rent payments.

Some online rent payment service providers let you pay your landlords electronically and will report your rent activity to credit bureaus if requested.

Building Credit Without a Credit Card

You must make your payments on time, month after month, if you hope to build your credit. Late payments can do severe damage to your credit, so you should avoid any financial obligation that puts you at risk of making late payments or defaulting. If you can make all your payments on time every month, you will build your credit up over time.

Building credit without a credit card does put you at a few disadvantages.

If you only have installment loans (loans with a set payment each month) and no revolving credit (in which the minimum payment changes each month), you won’t have an ideal account mix, which makes up 10% of your credit score.

Your credit utilization ratio – or the amount of credit you have tied up in debt – will also suffer if you have no credit card or other form of revolving credit. However, in most cases, no credit utilization is better than high credit utilization.

You can — and should — check your own credit regularly (you can get a free credit score, updated every 14 days, from Credit.com). You can also check your free annual credit reports from each of the three major credit bureaus for free at AnnualCreditReport.com. That way, you can be sure you have not become a “credit ghost” and could access credit if you needed it. It also gives you an idea of what a potential employer, landlord or lender might see when checking your credit. And monitoring your credit can also let you know if someone else is using your personal information fraudulently so that you can put a stop to it.

But it is not necessary to get a card you’d rather not have strictly because you believe you can’t get good credit without a credit card. There are many options out there to help you build your credit.

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  • StanLee TOOL

    Great article and just what I was looking for. Also, it was just the right length to give details, but not drag on and on. Thanks! 🙂

  • StanLee TOOL

    Great article and just what I was looking for. Also, it was just the right length to give details, but not drag on and on.

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