man handing another man cash with a purple background

How to Build Credit Without a Credit Card

Milad Hassibi April 11, 2018


Whether you are looking to get a mortgage, an auto loan, or a personal loan, having good credit can allow you to borrow money at a more affordable rate.

Credit cards are a great tool to build credit, but if you have bad credit, getting approved for an affordable card can be tough.

Like many consumers, you may have had trouble keeping up with minimum payments in the past and want to avoid using a credit card when possible.

Whatever your reason is for not using credit cards, building credit without a credit card is easier than you might think.

How to Build Credit Without a Credit Card

Utility Bills to Build Credit

If you have a standard set of bills you are paying each month (electricity, water, gas, etc.), you can call your utility company and ask to get your payments reported to the 3 credit bureaus.

Most utilities report customers to the credit bureaus due to missed payments, but rarely do they report any on-time payment activity.

This can also apply to your rent as well. Be sure to ask your landlord if they can report your rent payments. If your landlord refuses, you can hire rental reporting companies. These companies will report your rent payment information to the credit bureaus for a small monthly fee.

Building credit with utility bills is not as difficult to do as you might think. Since you are paying these bills already, it would cost you nothing extra to have them reported to the credit bureaus.

Loans to Build Credit

One of the best ways to build credit without a credit card is by taking out a small loan. Be sure that before you explore this option, that you will be able to repay the loan fully on time.

In some cases, the interest rate on a loan can be lower than the rate on your credit card payments, so you can save money by taking out a small personal loan. Taking out a personal loan to build credit is an effective and useful way to build credit without a credit card.

However, getting a small personal loan at an affordable rate can be difficult without a strong credit history. Be wary of any offers that seem “too good to be true”, as people with poor credit can often become the targets of predatory loans that can only sink you further down.

Authorized User Accounts for Building Credit

Being an authorized user on a credit card gives you the best of both worlds: you can have all the Your credit score is increasing when you become an authorized usercredit building aspects of a credit card. You will most likely have to become an authorized user on a trusted friend or family members card.

Make certain that the primary account holder has a good reputation for making on-time payments with a good credit history, as their mistakes can affect your scores as well.

Although your credit will most likely issue you a separate card with your name on it, the account will be under the primary user’s name. You do not have to use the card in any way to gain any of the benefits it can offer.

Check Your Credit Report and Score

Sadly, nearly 1 in 5 Americans have an error in their credit report. An error in your credit report could be lowering your credit score by 100 points or more, depending on the error. If you haven’t already, take a look at your credit report and score for free here. 

To get access to your credit score for free, you can use Credit

If you see an error in your credit report, be sure to file a dispute with the credit bureau. Legally, the bureaus have 30 days to respond to your inquiry.

Get a Secured Credit Card

Although hearing the word credit card can scare many consumers, a secured credit card works much differently. With a secured credit card, you receive a credit limit that matches the deposit you placed on the card.

For example, if you place a deposit of $300 on the card, your credit limit for that secured credit card will be $300. Once your statement is paid, the limit is refreshed.

Clear Up Old Accounts

If you have a bad credit score, chances are you may have some unpaid bills or balances. Take some time to read your credit report and see if there are any delinquencies reported.

If you see a negative entry for no payment, call the creditor and ask to work out a deal.

Creditors and debt collectors are just looking to get their money back. Offer your creditor a deal to pay back half of the past due balance in exchange for having the negative entry removed from your credit report.

Keep Old Credit Accounts Open

Credit history accounts for 15% of your total credit score. In order for you to maximize your credit history, its best to keep your older credit accounts open.

The average age of your accounts is used to determine how strong your credit history is. If you have a credit card that has been active for 5 years or more, you should consider keeping it active. You can even cut up the card and not use it if temptation is too strong.

Lower the Number of Applications

Having access to credit is always helpful, but applying for a furry of loans and credit in a short period of time sends the wrong signals to lenders. Each and every single credit card or loan application also requires a hard credit pull, sometimes referred to as a hard credit inquiry. These inquiries do have an impact on your credit score.

Although a hard inquiry only stays on your credit report for one year, multiple applications in a short period of time will have a detrimental impact on your credit score. Only apply for credit if you need it, not if it gives you 10% cash back at a specific store for one purchase.

Final Note

Building a strong credit score without a credit card is difficult but not impossible. It is important to remember that the key to building good credit is discipline and planning.

Be smart and vigilant about your money and remember that you do not necessarily need a credit card to be able to grow your credit score quickly.

If you have less than perfect credit and don’t know where to go, CrediReady can help. Our trusted network of credit repair experts can boost your score and help you qualify for the credit you need. Take a moment to fill out our free no-obligation credit repair inquiry form and start fixing your credit today!



Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.
get your free score

Auto Insurance

Get your free insurance quote now! Save big on auto insurance today!
get your free quote

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.
get your free quote