How to build credit without a credit card

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Credit cards payments are one of the major ways and the quickest ways people can improve their financial situation. But what if your current score is not high enough to qualify for a credit card? So knowing tips on how to build credit without using a credit card is very important. So that you can improve your credit score over time.

Bad credit will happen. In fact, more than 40% of Americans have a FICO credit score of less than 700. Here is Bankrate’s Guide on how to establish credit without a credit card and get your score back in the correct position.


8 ways to establish credit without a credit card

When it comes to improving your credit score, a credit card is not your only choice. Even though credit reporting agencies often use credit card purchases and payments to assess your credit. This method is not limited to credit cards.

If you pay on time and maintain a low debt credit ratio (ideally less than 30%). You can collect enough credit to get the card you want.

Obtaining loans from credit institutions to build credit

When you apply for a credit builder loan, the lender will deposit the full amount (usually between $300 and $1000) into a secure account. Not like ordinary loans, you can’t get the money right away. Instead, you pay a fixed amount every month until you pay off all the loan and then recover it in full. Credit builder loans provide a good way to build credit because you pay regularly but don’t spend extra money. All payments will be reported to major credit bureaus to help improve your credit rating.

Apply for a personal loan

Taking Personal loans also helps to build credit if you repay on time and in full as soon as possible. Although these loans usually have higher APRs than credit builder loans (especially if your credit history is limited or you have defaulted on the loan before), they can help you establish a solid credit starting point.

Think about car loans

When you pay on time, the car loan will count as good credit. If you pay cash, you won’t get this benefit, so if you need a car and want to build credit, find a low to medium APR and pay monthly that you can afford.

Repayment of existing loans

If you repay on time and don’t default on your loan, repaying an existing loan (such as a student loan) can improve your credit rating.

Report alternate payments to build credit scores without a credit card

Many creditors now realize that student loans, car loans, and personal loans are only the tip of the iceberg of credit. Therefore, they are often willing to consider alternative payment data to help build your credit score.

Apply for a secured credit card to improve credit scores

The approval threshold of secured credit cards is lower than that of unsecured credit cards because cardholders need to provide cash deposits in advance. The amount of this deposit is usually equal to your available credit limit, which means that a deposit of $200 gives you a credit limit of $200, $500 gives you a credit limit of $500, and so on. Security cards allow you to shop and pay, and even bring cash or other bonuses. Some credit companies offer credit increase plans to increase your limit after paying a certain amount on time.

Become an authorized user to improve credit scores

Credit companies sometimes allow cardholders to add authorized users. As an authorized user, you will receive a physical card and can access the credit limit of the host card without a credit check. In this way, you can make a purchase and report the entire credit card activity to the credit bureau without having to apply for a credit card yourself. However, it should be noted that if the host cardholder fails to pay or spends more than the credit limit, your credit will also be affected.

Rent payment to improve credit scores

Although most landlords will not report your monthly rent payment to credit institutions, this consistent payment structure helps to demonstrate a model of financial consistency. Other recurring payments, such as cable TV, Internet, and mobile phone contracts, can also help improve your credit. Ask your landlord and telecommunications provider to report your data or agreement to the credit institution directly.

Other considerations to improve credit scores

It is also worth noting that no matter how you choose to establish credit. Such as by obtaining a personal loan, a guaranteed card, or becoming an authorized user. Your success depends on three key factors:

Pay on time

Make sure that your payments are always on time. It is the best way to improve your credit. You can not only avoid any cash penalty or APR increase but also demonstrate the financial consistency model that credit institutions want to see.

Manage your debt to credit ratio to improve credit scores

The higher the ratio, the slower you build credit. By comparing your current credit balance with your outstanding debt, the organization is looking for a ratio of 30% or less. As an example, if you have a secured card with a limit of $1000 and a balance of $300, your debt to credit ratio is 30%. Lower than 10% is ideal and higher than 50% is difficult to establish a good credit score.

Maximize your credit history to improve credit scores

The longer you have a history of paying on time and controlling debt, the better your credit score. However, if you are just starting to build credit or are recovering from recent economic difficulties, your history is often limited. Help you improve your credit score by reporting as much data as possible, from rent and student loan payments to the car and personal loan details.


By paying on time, paying close attention to your debt to credit ratio, and considering various options, such as applying for a credit builder or personal loan, reporting other credit data, or applying for guaranteed credit options, you can get your credit rating back on standards.

We would love to hear about your ideas, suggestions, and questions regarding how to build credit without a credit card. So feel free to contact us.

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