How to Build Credit Without a Credit Card

Think you need a credit card to build credit? Think again. Whether you're credit-averse, recovering from past mistakes, or simply prefer to avoid the temptation of revolving credit, there are multiple effective ways to establish a strong credit history without ever swiping a credit card.

According to Experian, payment history accounts for 35% of your FICO score—and that payment history doesn't have to come from credit cards. Let's explore the most effective strategies for building credit without one.

1. Credit Builder Loans

A credit builder loan is specifically designed for people with limited or no credit history. Unlike traditional loans, you don't receive the money upfront. Instead, the lender places the loan amount (typically $300 to $1,000) into a secured savings account or certificate of deposit.

Here's how it works:

1. You apply for a credit builder loan (approval is usually easy since there's no risk to the lender)
2. The loan amount is held in a secure account
3. You make fixed monthly payments over 6 to 24 months
4. The lender reports your payments to all three major credit bureaus
5. Once paid in full, you receive the loan amount (minus any fees or interest)

Where to get one: Many credit unions, community banks, and online lenders like Self offer credit builder loans. They typically charge minimal fees and low interest rates.

2. Become an Authorized User

This strategy allows you to benefit from someone else's good credit history. When you become an authorized user on a family member's or trusted friend's credit card account, their payment history and credit utilization can be added to your credit report.

Key benefits:

• You're not legally responsible for the debt
• The account's entire history may appear on your credit report
• You benefit from low utilization and on-time payments
• You don't even need to use the card

3. Report Rent and Utility Payments

You're likely already making payments that could help build your credit—they just aren't being reported. Services like Rental Kharma, RentTrack, and LevelCredit can report your rent payments to credit bureaus.

According to U.S. News, rent reporting can be particularly powerful because rent is often your largest monthly expense, demonstrating your ability to handle significant financial obligations.

What can be reported:

• Monthly rent payments
• Utility bills (electricity, gas, water)
• Phone bills (including cell phone)
• Streaming services (through some platforms)

4. Use Experian Boost and UltraFICO

These free tools from major credit bureaus and scoring companies can give your credit an instant boost:

According to Credible, these tools are particularly helpful for people with thin credit files who have been making consistent payments that weren't previously counted.

5. Pay Existing Loans On Time

If you already have any type of installment loan, you're already building credit. This includes:

• Student loans: Federal and private student loans report to credit bureaus
• Auto loans: Your car payment is building your credit history
• Personal loans: These diversify your credit mix
• Mortgage: Your home loan is reported monthly

The key is consistency. Payment history is the most important factor in your credit score, so never miss a payment. Set up autopay to ensure you're always on time.

6. Consider Auto or Personal Loans

While you shouldn't take out a loan just to build credit, if you need financing anyway, it can serve double duty. As noted by OneMain Financial, an auto loan or personal loan adds to your credit mix and demonstrates your ability to manage installment debt.

7. Get a Co-Signer

If you're having trouble qualifying for credit on your own, a co-signer with good credit can help. The co-signer agrees to be responsible for the debt if you can't pay, which reduces the lender's risk and increases your approval chances.

Best practices when using a co-signer:

1. Choose someone who trusts you and has good credit
2. Discuss expectations and communication upfront
3. Make every payment on time to protect their credit
4. Plan to refinance independently once your credit improves

How Long Does It Take to Build Credit?

According to credit experts at Discover, building credit is a marathon, not a sprint. Here's what to expect:

Key Takeaways

• Credit cards aren't the only way to build credit—far from it
• Credit builder loans are designed specifically for this purpose
• Your existing payments (rent, utilities, loans) can all help
• Free tools like Experian Boost can provide immediate benefits
• Consistency is more important than speed—focus on never missing payments