How to improve credit score without credit card

Most people think of credit cards as a good way to build credit, but credit cards are far from the only way to build your credit and payment history.  

Credit cards aren’t available to everyone, if you are just starting to build your credit profile, or have had a few financial stumbles in the past, it may be difficult to qualify for a credit card.  

Credit cards also only build your revolving credit history, which builds a strong credit profile. To get a great credit score, it is important to have a good credit mix, which includes both installment loan accounts and revolving credit accounts. Credit mix is used to calculate 10% of your FICO® credit score. 

So, if you’re wondering “how to build credit without a credit card’, we’ve mapped out 7 ways to beef up your credit history and profile without needing a credit card.  

How to Build Credit Without A Credit Card: 7 Options  

Below is our list of 7 ways on how to build credit without a credit card. We’ll describe each option in more detail below. 

1. Open a credit-builder account/credit builder loan 
2. Have your rent payments reported to the credit bureaus
3. Have your utility payments reported to the credit bureaus
4. Become an authorized user on someone else’s account 
5. Open a secured credit card
6. Obtain a personal loan 
7. Get a student loan 

You can improve your credit by adding accounts and building a great payment history by making on-time payments towards multiple credit accounts. The longer your good payment history the better.   

It’s also important to have a mix of both revolving credit (like credit cards) and installment accounts (like a Credit Strong account). As we mentioned above, ‘Credit Mix’ makes up 10% of your FICO® Score, which is the score that 90% of lenders use to make credit decisions, so having a diverse mix of credit accounts can be a great jumpstart to improving your score.  

With that, let’s dive into the details of a few ways to build credit without a credit card.  

How to Build Credit Without A Credit Card: The Details 

Now that you have the list, let’s go into the details of how to build credit without a credit card for each of the options. 

1. Get a Credit Builder Account/Credit Builder Loan

If you want to build credit fast without a credit card, credit builder accounts are a reliable way to build your credit quickly without needing to buy an expensive item using high-cost store financing or spend your money on purchases every month using a credit card.  

Credit Strong offers an assortment of credit builder accounts so you can select the account type that best fits your personal credit building goals. 

A Credit Strong credit builder account is the combination of a secured installment loan and a savings account. When you open your credit builder account, Credit Strong (which is a division of Austin Capital Bank, an FDIC insured bank) gives you an installment loan.  

The money from the loan is deposited into a locked savings account. You make monthly payments on the loan and each monthly payment is reported to the three major credit bureaus, building your payment history and credit profile. With each payment, you unlock more of the funds in the savings account and grow your personal savings. 

2. Get Your Rent Payments Reported to the Credit Bureaus 

While your rent payments aren’t normally reported to the credit bureaus, there are services you can use or ask your landlord to use that will do so. Each time you pay your rent on-time, the service will report it as a positive addition to your credit report and over time it will help you increase your credit score and build a positive credit history. 

This can be a good option if you are a renter and don’t want to take out debt to work toward having good credit. Here is a list of some services that report rent payments to credit bureaus. These services are changing all the time so you should do your own research before you sign up for a service to make sure it’s the right one for you. 

3. Use Experian Boost

Another option that can help build your credit without going into debt is to have your utility payments reported to the credit bureaus. Experian Boost will report payment history on some of the bill payments you’re already making, like your phone, utilities, and streaming services. It’s run by Experian, one of the three primary consumer credit bureaus. 

You should be aware there is a tradeoff you need to make to use Experian Boost. You will need to share your bank login credentials with Experian. After sharing your credentials, Experian will then scan your bank account history looking for recurring utility payments to add to your credit profile. 

4. Become an Authorized User 

You may be able to be added to a family member’s or significant other’s credit account as an authorized user. This means that your loved one is the owner of the account, but you get your own credit card and use it to make charges. 

Your card activity will likely be reported to the credit bureaus on your credit profile, adding a credit account in your name. It’s important that both users manage the credit activity responsibly and make all payments on-time in order to build a positive credit history. If either person misses payments, it can harm both people’s credit.  

5. Get a Secured Credit Card  

Technically, this is a credit card, but it can be an effective way to build credit fast. Even if you don’t qualify for an unsecured credit card, almost anyone can get a secured credit card with any credit score: good score, bad score, or no score. 

Here’s how a secured credit card works: you make a cash deposit that serves as collateral for the card. The amount you deposit equals your credit limit. You can charge expenses up to that limit, then repay the debt. Those payments are reported to credit bureaus. 

Over time, if you pay your balance on-time, you may qualify for an unsecured credit card account, and you may be refunded that initial deposit you made. 

Something to be aware of is that secured credit card issuers often charge a large annual fee and tend to have higher interest rates than unsecured credit cards. That’s because, without good credit, you may be seen as more of a risky customer. It’s important to pay your balance in full each month to avoid high-interest fees and snowballing credit card debt. 

Also make sure to keep your credit card balance low, ideally at 10% of your credit limit or less. Keeping your credit utilization below 10% is a good way to improve or optimize your credit score. 

6. Get a Personal Loan

Another way to build credit without opening a credit card is to apply for a personal loan. Yes, it’s debt, but if you use the loan funds prudently you can make progress on building your credit while obtaining something of value. 

You can take out a personal loan for almost any purpose: to remodel your home; take a vacation; or refinance other debt.  

If you don’t qualify for an unsecured personal loan, there are lenders who offer secured loans. That means you provide some sort of collateral as security against the loan. That could be your vehicle, your home, or something else of value. 

Before you take out any personal loan you should carefully evaluate your personal financial situation to make sure you can easily repay the loan. Obtaining a loan and then not making on-time payments will hurt your credit score. You should also shop around for the best loan terms as rates and fees may vary widely between different lenders. 

7. Get a Student Loan

This may not apply to everyone, but if you’re a student or have considered going back to school, taking out a private or federal student loan will add an installment account to your credit history. If you already have a student loans, make sure that you make all of your payments on-time since late or missing payments can significantly decrease your credit score. 

Other Factors to Build Credit

Hopefully, we’ve answered your questions about how to build credit without a credit card. You should also know that opening credit accounts or a secured credit card and building your payment history with them isn’t the only way to improve your credit.  

If you already have credit cards or lines of credit, paying down the current balance may help to increase your credit score because it improves your debt to credit ratio. Your debt to credit ratio is how much debt you owe against the amount of credit you have available. Your debt to credit ratio is often referred to as your ‘credit utilization’ ratio. 

If you have a combined credit limit of $5,000 across all credit cards and accounts and you have debt of $1,000, your debt to credit ratio (credit utilization) is 20% ($1,000 / $5,000). The lower that ratio, the better your credit. Keeping credit utilization below 10% is ideal. 

Your credit scores are also based on the length of your credit history, so realize that if you have a credit card and don’t use it anymore, you still should hang onto it because the longer you have each credit account, the longer your ‘average age of credit’ which will help your credit profile.  

Your credit scores will also be impacted by how many inquiries you have on your credit report, which is why it’s wise not to apply for multiple credit cards or loans in a short period of time. Only open cards or accounts when you need them or if you have specific credit–building strategies in mind. 

Be diligent about monitoring your credit report and making sure there are no discrepancies (incorrect information). If, for example, you know you’ve paid off a debt and it still shows in your credit history after several months, contact the credit bureau to get it removed.  

Building credit is a lifetime journey, and it’s one you need to devote attention to in order to ensure that your positive credit profile grows over time while improving your credit score. 

Frequently Asked Questions

We’ve described several options of how to build credit without a credit card. If you still have questions, hopefully we have the answers. 

1. Do you need a credit card to build credit?

No. You don’t need a credit card to build credit. There are other products and services, such as opening a credit builder account, or taking out a personal, auto, or student loan, as well as using services that can help you build credit over time.  

2. Can you have a credit score without a credit card?

Yes, you can have a credit score (and a credit history) even if you never have a credit card. As long as you have an account that reports to the credit bureaus.  

This could be a personal loan or car loan, or even your rent payments if your landlord uses a service that reports them to a credit bureau. Keep in mind that it can take up to 6 months to get a credit score if you don’t already have one and you’ve opened an account that reports for the first time.

3. Does paying your bills build your credit?  

Paying bills doesn’t automatically build your credit unless you use a service to get those payments reported to the credit bureaus. Most revolving accounts like credit cards or installment accounts like car loans or credit builder loans get reported to credit bureaus and show up on your credit report.

4. Does paying rent build credit?  

Paying rent doesn’t typically get reported to the credit bureaus unless you use a service that gets those payments reported. So normally, no, paying rent does not build your credit. 

5. Can you build credit with a debit card?  

Debit card activity doesn’t get reported as part of your credit history because debit cards pull money from your bank account. They don’t access borrowed money. They aren’t credit accounts (like a loan or credit card) that report payments to the credit bureaus, so they don’t build credit.

Take Control of Your Credit and Get Started! 

Now that you know how to build credit without a credit card, it’s time to take action and start building your credit, achieve the credit score you want, and transform your life with better credit.  

One of the fastest and easiest first steps on the road to credit score improvement is to open a credit builder account/credit builder loan, and Credit Strong is one of the best options. Just think, in about the 3 minutes it takes to open an account you could already be building stronger credit! 

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