How to Build Credit Without a Credit Card

Your credit score is used for more than just a credit card or loan approval. Companies use it to set home and auto insurance rates and approve apartment leases.

Using a credit card is the most obvious way to build credit. You make purchases with your card, pay it off each month, and the credit card issuer notifies the credit bureaus. However, credit cards can also be problematic if they’re not managed properly.

If you’ve been in a situation where you’ve had to pay down credit card debt, gotten in trouble with a credit card, or just plain want to avoid the possibility of that happening, here are some alternative ways to build credit.

Also, these tools can be used by anyone — both those with limited credit history and those with good credit. If you want great credit, these credit-building tools just might put you over the top.

Table of Contents
  1. Build Credit By Paying Your Bills
  2. Get “Credit” for Paying Your Utility Bills
  3. Organize Your BNPL Payments
  4. Get Your Rent Reported to the Credit Bureaus
  5. Earn Credit From Your BNPL Payments
  6. Take Out a Credit Builder Loan
  7. Take Out a Personal Loan
  8. Become an Authorized User
  9. Credit Report Best Practices
    1. Check Your Credit Report Regularly
    2. Keep Your Debt-to-Income Ratio Low
  10. Frequently Asked Questions
  11. Final Thoughts

Build Credit By Paying Your Bills

StellarFi issues you a bill pay card where you connect all of your automated payments, such as streaming services, utility payments, and more. It’s a no-brainer way to build credit because you’re already making these payments, so you might as well get credit for them.

StellarFi ensures all of the bills are paid automatically and on time and that the payments are reported to the three major credit bureaus. From there, the payments to StellarFi are automatically authorized from your linked bank account. It works by giving you a very short-term loan and reporting on-time payments.

There are three different membership plans to use StellarFi, starting at $4.99 per month for less than $500 in monthly bills. There is a 30-day trial to see how you like it.

Check out our full StellarFi review.

Get “Credit” for Paying Your Utility Bills

Experian is one of the three major credit bureaus (in fact, it’s the largest), and they offer their Experian Boost program to help you build or improve your credit.

You can build your credit score by paying your utility bills through Experian Boost. With Experian Boost, you can have your paid utility bills added to your monthly credit report. Eligible bills include Netflix, Hulu, HBO, other streaming services, your phone bill, your electric bill, and more. 

As good as that sounds, there are a few limitations. First, the credit enhancement will appear only on your Experian credit report, but not those issued by Equifax and TransUnion. Second, it won’t be much help if you have a pattern of late payments on those bills. Third, the program is designed to increase an existing credit score. It’s not clear how much benefit it will provide for someone with no credit.

Experian Boost is free, so there’s no risk of using the service and then canceling it afterward. Read our full review or visit the Experian Boost page to learn more.

Organize Your BNPL Payments

In 2021, the credit bureaus announced they would start collecting info about your buy now, pay later (BNPL) payment transactions — which means if you have a lot of BNPL plans and find yourself missing payment due dates, that could show up in your credit history.

One way to keep yourself organized is with Cushion. This is an app that tracks all your BNPL payment due dates, and you can also make those payments automatically with Cushion, which then reports those monthly payments to Experian.

You’ll get a virtual Cushion card, which you put on file with your billers. Then, when a payment is due, Cushion makes it on your behalf and charges your bank account to cover the cost. At the end of the month, those payments are added up and reported to the credit bureaus. So, you get to build your credit history while also paying off your BNPL debt — a win-win.

Cushion pricing starts at $4.99 per month to manage, pay, and build credit with BNPL payments, or you can upgrade for $12.99 and incorporate all bills, including subscriptions and utilities. The premium version can also automatically sync your BNPL and bills to your preferred calendar.

Learn more about Cushion.

Get Your Rent Reported to the Credit Bureaus

Some companies will report your on-time rent payments to one or more of the three major credit bureaus.

If you can partner with a company that will do that, you can build your credit simply by paying your rent.

Rent Track and PayYourRent are examples of companies that work with property owners to accept rental payments that are then reported to the credit bureau. 

Another option for getting your rent payments reported to the credit bureau is to use the Bilt Mastercard to pay your rent. Yes, this is a credit card. But it’s a credit card that allows you to pay your rent with the card and gives you reward points for doing so.

Learn more in our Bilt Review

Earn Credit From Your BNPL Payments

Again, if you use any BNPL apps, you may want to consider trying out Sezzle as your BNPL of choice. It offers free Pay in 4 and Pay in 2 options, but if you’re specifically looking to build credit, you’ll want to opt for Sezzle’s paid subscription.

The plan has a monthly fee (pricing plans may vary per person), but the advantage is your monthly installment payments will be reported to all three major credit bureaus. This option can be more flexible than getting a secured credit card but offers similar benefits.

The paid plan also includes additional perks like shopping rewards, discounts, and the ability to reschedule one payment per order. You can also add the Sezzle Virtual Card to your Apple or Google Wallet for in-store purchases.

You can spread your payments out over 3 to 48 months, but remember you will have to pay interest.

Take Out a Credit Builder Loan

Credit builder loans provide a unique way for people to build and repair their credit and save more money. If you’re one of those people with little to no credit or poor credit, getting access to credit to improve your credit score may prove difficult. 

Credit builder loans are designed for people with little to no credit or poor credit. Here’s how a credit builder loan works:

  1. You pay a certain amount to the credit builder company each month. 
  2. The credit builder company sets that money aside for you and reports each payment as an on-time payment to the credit bureau.
  3. At the end of the loan “term,” you get the money you’ve paid back, minus fees and interest charges. 

Self is one company that provides credit builder loans. With Self, you can choose a monthly payment amount between $25 all the way up to $150 per month. All loan terms are 24 months. Learn more in our Self Review.

Cleo is another credit-building option. Cleo is a budgeting app that helps you build credit. You can find out more in our Cleo Review.

Take Out a Personal Loan

Another option is to consider taking out a personal loan if you need one. Personal loans have limited funds and don’t revolve like a credit card, so once you pay it off, you won’t risk accumulating debt on that account again. 

Talk with your local bank or credit union about taking out a personal loan. You could even take out the loan and never use the money, stashing the loan proceeds into a savings account and making loan payments from the savings account. 

Become an Authorized User

Another way to build credit is to become an authorized user on someone else’s credit card

Note that you would likely have to agree not to have access to the card. Preferably, you would become an authorized user on a card that belongs to someone close to you, such as a parent.

If that person uses their cards responsibly and keeps a high credit score, you may benefit by having your name associated with one of their cards. 

Ask a parent, sibling, or someone close to you if they would add you as an authorized user. They don’t have to give you full access to the card.

Credit Report Best Practices

In addition to the credit-building tips shared above, the following best practices can help you maintain a good credit score.

Check Your Credit Report Regularly

Regularly checking your credit report can alert you to errors or fraudulent activity that threatens to derail your score. It also helps to keep your credit top of mind, and as they say, what gets measured gets improved.

By law, you can get a free copy of your credit report every year by visiting annualcreditreport.com. (However, after the pandemic, the bureaus let you check every week now!)

They will allow you to view and print out your credit reports from Experian, Equifax, and TransUnion. When you get your report, review it thoroughly, and work with each credit bureau to repair or remove any errors. 

For more frequent access to your credit report and score, consider signing up with a credit score app.

Keep Your Debt-to-Income Ratio Low

Keeping your debt-to-income ratio down is another way to help ensure your credit score gets and stays high.

To calculate your DTI (also known as your credit utilization ratio), divide the amount of revolving debt you have by the total issued credit line amounts. 

For example, let’s say you have three credit cards:

  • A Mastercard with a $5,000 credit limit and a $3,000 balance
  • A Visa card with a $3,000 limit and a $2,000 balance
  • A Discover card with a $10,000 limit and a $1,000 balance

Your total issued credit card limit is $18,000. Your credit card balances total $6,000. When you divide 6,000 by 18,000, you get 0.33. That means you have a DTI of 33%.  

Experts recommend a DTI of no more than 30% to maximize your credit score from a DTI perspective. 

However, there are other factors that affect how your credit score is calculated. Paying your bills on time, having a long positive payment history, and having a balanced mix of credit types (i.e., installment loans and credit cards) will also help build your credit score. 

Frequently Asked Questions

What is the fastest way to build credit?

The fastest way to build credit is likely to come from using one of the secured credit strategies. Whether it’s a secured installment loan, like a car loan, a credit builder loan, or a secured credit card, the immediate payment track record will enable you to build credit in the shortest amount of time.

At the opposite end of the spectrum, federal student loans can be slow. That’s because they’re usually accompanied by a payment deferral period that can last several years.

Can I build credit with a debit card?

Unfortunately, the answer is no. That’s because debit cards are not financing arrangements. They simply give you access to the funds you have on deposit at a bank or credit union. There are no payments to be reported to the credit bureaus.

How long will it take for me to build credit?

If you currently have no credit, you should expect at least six months to pass after implementing one of the strategies in this guide to begin producing results.

Before the credit bureaus can calculate a credit score, you first need to demonstrate the ability to make regular payments. That will generally take at least six months.

But even after six months have passed, you may have only a low credit score. That’s because a single loan has a low impact. Generally speaking, you won’t see your credit score climb into the mid-or upper-600s until you have at least two or three credit lines outstanding, with a payment history going back 12 months or more.

Final Thoughts

It’s true that using a credit card use is one of the quickest and easiest ways to start building credit, but it’s nice to know there are other credit-building strategies that don’t require having your own credit card.

If you’re struggling to qualify for a credit card account or you’d prefer not to use one at all, try one or more of the alternative credit-building methods I shared above. It may take some time, but your efforts will pay off.

Lastly, if you haven’t ordered a free copy of your credit report, that’s a great place to start.

Cushion disclaimer: Many factors are involved in your credit score, making the experience and result unique for each individual. Cushion does not guarantee and cannot predict that your credit score will improve by a specific amount, percentage, or at all within a specific period of time or by using Cushion. Credit building is one of several premium features included in Cushion’s paid subscription.

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About Laurie Blank

Laurie Blank is a blogger, freelance writer, and mother of four. She’s psyched about teaching others how to manage their money in a way that aligns with their values and has been quoted in Bankrate.

She's a licensed Realtor with Edina Realty in Minneapolis, Minnesota (also licensed in Wisconsin too) and has been freelance writing for over six years.

She shares powerful insights on her blog, Great Passive Income Ideas, that will show you how you can create passive income sources of your own.

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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