7 smart ways to build credit without a credit card

Not everyone has — or wants — a credit card. Maybe you’re not old enough to get one yet. Maybe you’re trying to avoid debt. Or, maybe you just don’t feel ready to take that step. But building credit does matter. A solid credit history can help you rent an apartment, buy a car, or even land a job. It shows lenders (and sometimes even landlords or employers) that you’re responsible with money.

The good news is that there are a bunch of smart, low-risk ways to start building credit history that don’t involve swiping anything. Below, we rounded up seven expert-backed strategies on how to build credit without a credit card to help you get started.

1. Start with a credit-builder loan

A credit-builder loan is designed to build your credit from the ground up. “One of the best credit-building strategies is using a credit-builder loan, typically offered by community banks or credit unions,” according to Rose Jimenez, an accountant and Chief Financial Officer at Culture.org. 

Here’s how credit builder loans work. Instead of getting the money up front like a regular loan, the bank or credit union puts the loan amount into a locked savings account. You make small monthly payments over time, and each one of your on-time payments gets reported to the credit bureaus. When the loan is paid off, the money gets released to you, kind of like saving while building credit at the same time.

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2. Use your rent payments to build credit

If you're already paying rent every month, you can use it to build your credit. “By enrolling in a rent-reporting service, tenants can have their on-time rent payments reported to major credit bureaus, which significantly boosts credit history, especially for those without traditional loans,” says Jimenez.

You can also try services like Esusu and RentTrack. Or, ask your landlord if they already use a platform that reports rent payments. Just know that not every lender looks at this kind of credit info the same way. Still, it’s a solid way to start building credit, especially if you’re new to it.

3. Make it a habit to pay your bills on time

You may already be paying things like your phone, electricity, or even internet bills every month. Let those payments work in your favor. “Alternative credit tools like … on-time utility payments can play a powerful role in establishing credit history,” says Jimenez.

You can use tools like Experian Boost to link some of your regular bills to your credit report. It’s a helpful way to start building credit, especially if you don’t have any loans or credit cards yet.

4. Back yourself with a secured loan 

With a secured loan, you’re borrowing money and using your own savings as a backup in case you can’t pay it back. It’s a way to build credit while showing that you can manage monthly payments.

But it’s important to read the fine print. “Secured loans… can be good, but if the borrower is paying interest to borrow their own money to get the history reported, this seems like a hamster in a wheel and more like a scam,” says Heidi Clemons, Accredited Financial Counselor (AFC®) and financial coach at Managed Expectations. If you go this route, make sure the loan is reported to the credit bureaus and that the fees or interest are worth the benefit. 

5. Piggyback on someone else’s good credit 

If you have a parent or family member with a strong credit history, they might be able to help you build credit by adding you as an authorized user on their credit card. “Being on the account allows you to inherit their positive credit history,” says Ali Zane, CEO of Imax Credit Repair. 

The best part? You don’t even have to use the card to get the benefits! It’s the account’s payment history that gets reported to the credit bureaus.

6. Apply for a loan with a cosigner

If you’re having trouble getting approved for a loan on your own, a parent or guardian can help by cosigning. “Using a cosigner that has a great credit score and history can help get the borrower a loan and possibly a better interest rate,” says Clemons.

This works for a student loan, your first car loan, or even a small personal loan. Just make sure you and your cosigner are on the same page since they’re also responsible for the loan.

7. Use loan payments to show you’re reliable

Whether you took out a loan on your own or with a cosigner, what you do next matters. Student loans, auto loans, and personal loans are all installment loans (meaning they have a fixed payment schedule), and they’re reported to the credit bureaus.

Paying those loans on time every month helps you build credit and shows future lenders that you’re responsible with borrowed money. Make it easier for yourself by setting up reminders or automatic payments!

Ultimately, you don’t need a credit card to start building credit. These expert-backed tips (plus some consistency!) will set you up for a strong credit history. And there’s no reason you can’t start right now!

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