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How to Build Your Credit History Without Using a Credit Card

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Most people believe that they need credit cards to get a credit score, the three-digit number that unlocks many financial doors in life and is an important aspect of financial stability.

A credit score plays a major role in determining what you’ll pay for a mortgage or car loan. It can even determine whether you get an apartment or a job.

The belief that you must have credit cards in order to have a credit history or credit score is a myth. There are alternative ways to build credit without having credit cards.

Many low-income consumers have never been in a financial position to apply for credit, and are considered “credit invisible.” Young people with no buying and borrowing history, are in the same boat. There are also people who just don’t like credit cards, or don’t want to deal with the temptation of having them.

Whatever your situation, you can build credit, or raise a credit score, without a credit card. Many of the alternatives don’t involve borrowing money or going into debt but allow you to save money. Some even build credit with bills you’re paying now, like rent and utilities.

Before you consider credit-building alternatives, let’s look at why it’s important to have a credit history, credit report and credit score, what they mean and how they work.

Understanding Credit Reports and Credit Scores

A credit report is a history of how you have used credit. Any time you borrow money, including getting a credit card, it’s reported to the three major credit reporting agencies – TransUnion, Experian and Equifax.

Your credit score is a number between 300 and 850 that rates how you handle borrowed money. That means not only how good you are at paying it back, but how much you depend on it.

Bad credit – late payments, accounts in default – stays on your credit report for seven years but counts less as the months and years of good credit practices build. Good credit, for instance a paid-off loan, may stay on your account much longer than seven years, depending on the reporting agency and the lender.

In general, you want to shoot for a score of 700 or higher. Most banks and credit card companies offer access to your score if you have an account with them.

When you apply to borrow money (or rent an apartment, get insurance, or even apply for a job), the lender or business checks your credit report to see if you’re a good risk. You can check your credit report too, at no cost, once a year from Be sure to get all three, because they may differ, since not all lenders report to all three agencies.

FICO and Vantage both score consumers on payment history, credit utilization (how much of the credit you are approved for that you are using), credit history, types of credit accounts and number of new accounts.

Your credit score can constantly change, particularly if you use credit cards a lot. Say you have two credit cards and they’re both maxed out a lot of the time, but you make big payments every few months, then go on to max them out again. Your score will yoyo as your utilization increases and decreases.

What Determines a Credit Score

FICO and Vantage give different weight to elements that build a credit score, but generally look at the same factors. FICO uses a percentage; Vantage is less specific.

  • Payment history: FICO, 35%; Vantage “extremely influential.”
  • Credit utilization (balances in relation to credit limits): FICO 30%; Vantage “highly influential.”
  • Length of credit history: FICO 15%; Vantage “highly influential.” FICO counts consumers who have two accounts with payments for six months or more; Vantage will include an account that’s been open for a month if the consumer has another one that’s at least two years old.
  • Account mix: FICO 10%; Vantage “highly influential.”
  • New accounts: FICO, 10%
  • Credit inquiries: Hard inquiries by lenders have a negative impact if there are too many within a certain amount of time. FICO and Vantage allow several for the same purpose (for instance, a car loan), 45 days for FICO, 14 for Vantage (45 for mortgage inquiries).
  • Overall amount owed: Vantage “moderately influential.”

9 Ways to Build Credit Without a Credit Card

Some of the ways to build credit without a credit card involve borrowing money. But it’s also possible to use things you are doing now – like paying rent and utilities – to build credit without going into debt.

The bottom line is that paying what you owe when it’s due can be used to your advantage to show credit agencies and potential lenders that you will pay money back.

1. Credit Builder Loans

A credit-builder loan is kind of a backwards loan in which you make monthly payments to a lender for a set amount of time, usually one or two years, then get the “loan money” at the end. Credit builder loans are offered by banks, credit unions and online financial tech companies. The lender puts the money into an interest-bearing account at the beginning of the loan term. The borrower gets the balance, usually minus interest, and fees when the term is complete. The lender reports the payments to the three credit bureaus, thereby building a credit history for the borrower. Credit builder loans are usually for less than $3,000 and are a way to prove you can make on-time payments. If you don’t make the payments on time, the loan won’t help your credit score.

The downside is that the loans, like all loans, cost money and most borrowers get less at the end of the term than what they paid. The irony is that the same payments made to a savings or certificate of deposit account would yield interest for the consumer at the end of one or two years but would not count toward their credit score. Some lenders, particularly credit unions, may decrease the cost to the borrower by the amount of interest the money made over the term, but the loan will still cost you money. Research your options thoroughly and make sure you’re getting the best deal if you decide to use a credit builder loan to establish credit.

2. Reporting Rent

Rent is likely the biggest bill you pay all month, but historically, it hasn’t counted toward your credit score or credit history. That’s changed in recent years, and there are a number of agencies that allow landlords and tenants to report rent payments to credit bureaus.

Reporting rent is a great way to get a credit score and establish that you can pay bills on time without borrowing money. Housing authorities and large property management companies are more likely to report, but there are also rent reporting services for tenants. Most of the landlord-based reporting agencies require the tenant to opt in. That helps protect tenants who have a shaky history of paying, since property owners use the services to track tenants and decide whether to rent to them.

If you choose rent reporting, but don’t pay your rent on time, it will backfire.

Freddie Mac, the government-sponsored mortgage guarantor, has a rent reporting service that is free to tenants in housing authority property. Many other services charge a fee. Your landlord may also charge a fee if they use a program to report. Rent reporting companies also have different ways of reporting things like late payments. Apps like Experian Boost, Rent Reporters, BoomPay and PayYourRent all have different setups, and different fees. Some, like Experian Boost, don’t report to all three credit bureaus. If you are reporting yourself, research rent reporting services thoroughly before signing up.

3. Becoming an Authorized User

You can be added as an authorized user on someone else’s credit card, which means that you can use the card and your name will be reported to credit bureaus. This is a first step toward getting a credit history and credit score, but not a full step. The primary user of the card is still responsible for making payments, and the credit bureaus know that. That means you don’t build a payment history, which is crucial to a full credit history and credit score.

One advantage of being an authorized user if you’ve never had a credit card is that, when done properly, it teaches you how to use a credit card responsibly and can lead to successful full credit card use of your own.

4. Reporting Utility Bills

Reporting utility bill payments to a credit bureau is another way to build a credit history and get a credit score without borrowing money. Utilities are things like electricity, cable, phone service, water, and heating oil or gas. Like rent, monthly utility payments aren’t normally reported to credit bureaus. If you’re late on payments, though, the utility may report you even if they don’t report on-time payments.

Check with your utility company to see if they have a credit bureau reporting system you can opt in to. If they don’t, you can sign up with a reporting agency. Research options in-depth before you sign up. Some may charge a fee. Others, like Experian Boost, only report to one credit bureau, which means that you may not have a credit score with the other two bureaus.

5. Secured Credit Cards

A secured credit card works much like a traditional credit card, but you make a security deposit that’s usually equal to the credit limit. The lender holds the deposit in case you default on the card. If you make your payments on time, when you pay off the card and close the account, you get the security deposit back. Some lenders allow you to convert the card to a traditional credit card after a certain amount of on-time payments.

Lenders don’t require a credit score for a secured credit card. One drawback is that APRs are often higher than with traditional credit cards. That won’t matter if you pay the balance every month, but just like traditional cards, it can cost you a lot of money if you have a high balance and don’t pay it off.

6. Retail Store Cards

Retail store cards are credit cards, but because they are often limited to use at the retail chain that offered them, that means you may use it more sparingly than a general credit card. They also usually have a lower credit score requirement. They also tend to have a lower credit limit than a traditional credit card and higher APR. To make up for it, they often come with discounts, free shipping, cash-back rewards, and other perks.

Store cards generally require a lower credit score than a traditional credit card. If you pay the balance off every month, or at least make on-time payments, a store credit card is a good way to build credit without generating a huge debt load. Beware of “open loop” store cards that are actually traditional credit cards but are issued by a store. If you’re looking for a store credit card to build credit, rather than a traditional credit card, you want to make sure it’s a “closed loop” card that can only be used at the store chain.

7. Student Loan Repayment

Paying back student loans is a good way to build a credit history and credit score. Like other loans, your student loans appear on your credit report. Making on-time payments will have the same positive effect that making on-time payments on your other accounts does. As the balance goes down and you owe less, your credit score will also go up. Paying back student loans also has another positive credit score effect in that they’re a different type of credit than a credit card, and credit scoring agencies like to see a variety of credit accounts.

8. Auto Loan Repayment

Auto loan payments are one of the biggest bills a person has every month, right behind rent or mortgage. It may be tempting to be late on a payment or even miss a month if other bills are begging for attention, but don’t do it. Your auto loan is reported to credit bureaus, and on-time payments will help your credit score health. In a worst-case scenario, a car repossession will stay on your credit report for seven years and have a major negative impact, even if you catch up with payments and get your car back.

As with other loans, having an auto loan on your credit report helps show you can handle more than one type of credit account, and if you make the payments on time, it has a positive impact on your score.

9. Personal Loan Repayment

One way to build credit is to take out a personal loan and then make on-time payments. There are online lenders and credit unions that will lend money to a borrower who doesn’t have a credit history. Credit unions, in particular, are a great place to do financial business. They are member-owned, so their fees are lower, and they are often more flexible with loans than banks. Visiting a local credit union in person and opening a share account – a savings or checking account that gives you membership in the credit union – can help build a relationship that will benefit you when it comes to borrowing money and building credit. Teachers, government workers and people who work for a large industry may have a work-related credit union they can join. There are also credit unions linked to where you live.

Online lenders, too, offer a variety of personal loans to people with little or no credit.

As always, be sure to do your research and make sure that fees and other aspects of borrowing won’t have a negative impact on your wallet or goals. Do not look to a payday lender or short-term lending for credit-building. Payday lenders usually don’t report to the credit bureaus and their fees and high interest will cost you a lot of money.

Tools and Services for Building Credit

There are many types of ways to build credit without a credit card. Everyone’s financial situation is different, so be sure to research any options you’re considering carefully and make sure they’ll help your wallet, not hurt it.

  • Experian Boost is an app that users can sign up for at no cost with a basic Experian account. Users choose what payments to report to Experian, including rent and utilities. Experian scans the user’s bank accounts to pick up monthly payments. Late payments are not reported. Experian Boost only reports to Experian, so it does not affect Transunion and Equifax credit reports and scores. The basic Experian account and Boost is free, but users must upgrade for a fee to get access to credit reports and FICO scores from all three bureaus.
  • Experian RentBureau is a database for rental payment information that’s used by property management companies and third-party rent reporters, who use the service to check on potential renters. It contains renter information including payment history, bad check history and outstanding balances and rental debt. Tenants can get a free copy of their report every 12 months through Experian by calling 877-704-4519 or downloading the form, that must be mailed, to request a copy. Tenants have a right to dispute information they think is incorrect.
  • Experian SmartMoney is a digital checking account (that can include a debit cardz0 that integrates with Experian Boost by tracking payments made for rent, utilities, cell phones and streaming service. It can help users build a credit history, but only reports to Experian, not the other two credit reporting bureaus.
  • RentTrack is a company that allows both renters and landlords to report rental payments as a way to build credit history for renters. Property management companies that use RentTrack allow tenants to sign up voluntarily. It reports to all three credit reporting bureaus. Tenants can track their credit score on an app. Not only does it help renters build credit, but the company also says that it benefits landlords because tenants who use it are incentivized to pay on time.
  • RentReporters, unlike RentTrack, is signed up for by tenants. You pay a fee and Rent Reporters verifies rent payments through your landlord. It reports up to 24 months of payments, including a past landlord if you haven’t been at your address that long. RentReporters only reports to TransUnion, not Experian or Equifax. It requires cooperation from your landlord, who must verify your payments.
  • BoomPay is a rent-reporting app for tenants, reporting to all three credit bureaus. Users sign up and connect to the bank account they pay their rent with. The app collects positive rent payment information and reports it to the bureaus. Users pay $2 for ongoing monthly reporting, or a one-time $25 to have the previous 24 months of rent payments reported to the bureaus. Obviously, it’s only for you if you’ve paid the rent on time for the reporting period.
  • Pay Your Rent is an app that allows tenants to pay their rent to the property owner directly through the app with a credit or debit card, or echeck. Landlords and tenants must both agree to the service, with the landlord paying. The fee for property owners also includes criminal history and eviction checks on potential tenants and a maintenance request feature for tenants. Property owners can also link utilities for payment.
  • Self is an online financial technology company that offers a credit builder loan to consumers with no credit history, as well as those who need to rebuild their credit. Borrowers pay Self monthly for 24 months, and then get money back at the end. Unlike some credit builder loans, where the borrower makes interest on their loan, the 24-month loan comes with a $9 admin fee and APR between 15.72%-15.92% a month, depending on loan amount, costing borrowers $89-$533 depending on the loan level. Loans range from Small Builder, which is $600 with $25 monthly payments, but the borrower gets $520 at the end, to the X-Large Builder, a $3,600 loan with $150 monthly payments that nets the borrower $3,076.
  • Kikoff is a credit-building service that offers an account with a $750 line of credit to borrowers with a low, or no, credit score. After the first monthly payment, it reports to Equifax and Experian. It also has an optional one-year credit builder loan for $10. Borrowers get the full $120 back after 12 months of on-time payments. It also offers an optional secured credit card, which requires a minimum $50 deposit, and reports to all three credit bureaus. offers information, products and resources regarding credit unions and is a good step-off point to finding a local credit union that may offer credit builder loans or other products that can help build your credit score without some of the fees and costs other lenders may have.

The Consumer Financial Protection Bureau has a webpage that offers resources for people without a credit history who want to build one.

Credit Counseling Can Help Build Your Credit

Debt management is important for building or improving any sort of credit. If you are struggling with paying bills, and aren’t sure where to go when it comes to building credit, contacting a credit counselor at a nonprofit credit agency can help. A session with a credit counselor is free, and they can go over your budget, offer financial literacy and other resources and suggest debt relief solutions.

About The Author

Maureen Milliken

Maureen Milliken has been writing about finance, banking, investment, entrepreneurship, real estate and other related topics for more than 30 years. She started as the “Business Beat” columnist for the now-defunct Haverhill (Mass.) Gazette and currently is one of the hosts of the Mainebiz business-focused podcast, “The Day that Changed Everything” in addition to her daily writing. She also is is the author of three mystery novels and two nonfiction books.


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