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Chaz SomersMarch 22, 20236 min read

4 ways to build credit without a credit card

avatar Chaz Somers

Chaz Somers started his professional career as a part-time social media contractor at ZayZoon and since then, has evolved into a full-time content marketing associate. Chaz’s love for branding and storytelling has led him to blog writing, clothing design and video production all within ZayZoon.

Are credit cards bad? 

No, credit cards aren’t bad. Scary? Maybe. Intimidating? Perhaps. 

Depending on who you ask, the words associated with a credit card aren’t always positive. If you remember correctly, we recently published a blog all about budgeting with a credit card.

This article was mainly directed toward people with negative feelings towards credit cards and aimed to ease their anxiety and highlight the benefits of credit cards—like how to build credit because whether you like it or not, eventually you're going to figure out that it's important to build credit.

In this article, we’re going to learn how to build credit without a credit card, no matter what your credit history looks like. 

Building good credit will help you secure better rates on personal loans like auto loans, student loans and mortgages, while improving your actual credit limit.

If you’re still avoiding credit cards out of fear, we highly recommend reading our first article on how to budget WITH a credit card, but if you’re simply looking for more options when building credit, checking your credit report and credit history, this article should be able to help you on your personal finance journey. 

Why do people fear credit cards?

A credit card can easily change from a valuable financial tool to an "unlimited fun-card" without proper restraint.

Having more flexibility to make rent and utility payments can be a game-changer while living paycheck to paycheck and developing a positive payment history will be financially beneficial to you in the long run—so where do people go wrong?

For the financially irresponsible (or simply just the financially inexperienced) going from no access to money to a thousand-dollar credit limit can be trouble. Overspending can be extremely enticing which can make using a credit card responsibly a difficult task.

Once you've developed poor spending habits as a card owner, making on-time payments becomes extremely hard. This affects your fico score and makes applying for a personal loan much less appealing.

Do I need a credit card to build credit? 

Having a long credit history of on-time monthly payments will certainly help you build credit quicker but it’s not completely necessary. Applying for a new credit card can actually have negative initial effects on your credit score. 

But don't worry! 

When applying for a personal loan, whether it be student loans or a mortgage on your house, your credit score will determine the rates you pay and the options available to you.

People who have a strong credit history (i.e. a history of making credit payments on time) are seen as less liable to miss a payment, which makes things easier for the credit provider. 

Building a good credit score helps prove you can be trusted to make payments in a timely manner but this doesn’t need to be done solely through a secured credit card. 

How to build credit without a credit card

Building good credit takes time. Just because you have a few good months in a row of paying your bills, doesn’t necessarily mean you’re going to convince credit bureaus that you can be thoroughly trusted—but don’t let that discourage you.

Your credit score is almost like a muscle. It won't magically change overnight but with the proper habits and some time, you will start to feel the positive impacts, like seeing your credit limit grow. 

Building credit without a credit card or bad credit history can feel intimidating but it’s not impossible. If you’d prefer to build credit in other ways—don’t fret, there are plenty of options out there for you. 

1. Credit-building products

Many financial institutions offer resources to help you improve your credit score simply by paying your normal monthly bills. With credit-building products, companies like Experian and can help build credit by creating and sending a credit report on payments that most credit scores wouldn't normally consider. 

These credit-building products report phone bills, internet bills, rent, cable, internet—even streaming service bills to the three credit bureaus to help you build credit. 

With credit-building products like Experian Boost, you get the option of connecting your bank, credit cards or service providers to your account and the payments will be reflected in your Experian credit report. 

These types of services are especially useful if you feel like you have good financial habits and stay mindful of your credit reports but feel as if it isn't reflected in your credit score.

The options available to you will vary but be sure to do your research and ensure they don't have a hard initial credit check and won’t negatively impact scores. 

2. Take out a credit builder loan

A credit builder loan is a loan taken out specifically with the intent of paying it off to improve your credit. Credit builder loans help prove to credit bureaus that you can be trusted to make payments in a timely manner.

Unlike a traditional loan, you won’t receive the money upfront. With credit builder loans, you will determine the amount you would like to work towards and make payments until it's paid off. Once the loan payments have been made, you will then receive the full loan sum from the financial institution and a boost to your credit score. 

Like all credit-building strategies, this won’t improve your score overnight but a credit builder loan will provide you with an additional source of credit reporting which can be used to improve your credit score over time to help secure a real personal loan. 

3. Pay installment loans on time

This one may seem a little obvious but on-time payments are crucial to improving your credit and forgetting to do so could end up costing you.

You likely already have some installment plan in place, whether it be credit card bills, mortgage payments or student loans. Staying mindful of them, especially as you look to expand your credit score efforts, is very important. 

4. Get credit for your rent

Similar to the credit-building products in our first option, there are also services that allow you to track your rent payments and use them to help build your fico score. 

Companies like Rent Reporters or Rental Kharma will send reports to TransUnion and Equifax regarding your current and past rent payments at your current address. 

You won’t need a credit card, to change the way you pay your rent or even connect a bank or credit union account to your rent report provider—but they will come with an initial investment and a monthly rate. 

Final thoughts

Although it may have once seemed very hard, there are many ways to build credit without a credit card and you don't need to look at a credit bureau as the bad guy.

Like building anything, building the proper credit score will take a plan, resources and a little bit of hard work and discipline. Once your plan is in place and you’ve found the resources that work best for you, then it’s time to start building some good habits that will hopefully last you a while. 

Don't be scared

Believe it or not, once you’ve made your plan, found the proper resources and developed the right habits, you won't need a credit card to start building credit and things will start to feel natural.


Chaz Somers

Chaz Somers started his professional career as a part-time social media contractor at ZayZoon and since then, has evolved into a full-time content marketing associate. Chaz’s love for branding and storytelling has led him to blog writing, clothing design and video production all within ZayZoon.