Mobile Navigation

Close Mobile MenuOpen Site Search

How to Build Credit Without a Credit Card

Main Blog Article Content


Whether paying a deposit on a cell phone plan or buying a home, your credit score is essential. Here we'll show you several methods on how you can build credit without a credit card.

Building Credit Without a Credit Card

Credit cards build your credit history, and making on-time payments on your installment loans demonstrates that you meet your obligations. When using a credit card, you must keep your credit-to-debt ratio below 30% to avoid concerns about your ability to repay your balance. Some may find using a credit card too tempting because it gives you access to a line of credit. At the same time, others may not qualify for a credit card if they've had some credit problems or have no credit.

Can You Have a Credit Score Without a Credit Card?

While credit cards are a popular way to build credit, it is not the only method to achieve this goal. You can create a solid credit history and earn a good credit score in alternative ways.

Can You Build Credit With Your Own Money?

Credit cards are an example of revolving credit where you have a credit limit. You can use your credit limit as much or as little as you want. You can use your money in other ways to help build your credit without using a revolving credit line.

7 Ways to Build Credit Without a Credit Card

There are more than seven ways, but here's how to build your credit without a credit card:

1. Pay Your Bills on Time

35% of your FICO credit score depends on whether you pay your bills on time. This criterion is the most significant factor influencing your credit score. It only takes one late payment to negatively impact your score. So, you should take proactive measures to ensure that you aren't late. Setting up a budget, automatic payments, email reminders, and text alerts are all viable solutions. Adopting these practices is a great way to avoid potential charges such as late fees and interest charges.

2. Repay Student Loans

Student loans are considered installment loans, so paying them back on time will help your credit score. Student loans have a set monthly amount of the principal and interest so that you can budget accordingly.

3. Get a Car Loan

Getting an auto loan could help you finance the purchase and work on your credit if you're in the market for a new car. Car loans are also installment loans, so you pay a fixed monthly amount that includes principal and interest and have a set expectation of your payments. Like other loans, calculate how much you can afford to borrow.

4. Apply for a Personal Loan

Personal loans can be used for various things, like home improvements. These are unsecured loans that aren't tied to an asset, so it can be more challenging to qualify for one.

5. Get a Credit-Builder Loan

Credit builder loans work in reverse. With these loans, the loan amount is kept in a savings account while you make monthly payments. You'll receive the funds after you've repaid the loan. Meanwhile, the lender reports your payments to the credit bureaus to help your score, and they get to keep the interest accrued.

6. Get Credit for Rent Payments

Some third-party services will report your rent payments to the credit bureaus. The caveat is that those payments aren't guaranteed to affect the credit score algorithm. For example, specific versions of the FICO  Score don't consider rental payment information in calculating scores. To alleviate this possibility, be sure to inquire about the service provider to which credit bureaus they report and find out from a creditor which credit score they use in their underwriting criteria.

7. Report Alternate Payments

Reporting phone, utilities, and streaming services to the credit bureaus is also offered by some third parties. These payments may show up for specific credit bureau reports, so you should do your homework on where it would apply for the service. Compare the costs of these services carefully when deciding whether the service is worth it—additionally, some of the reporting information that these services track is already reported to your credit report.

Keeping an Eye on Your Credit Score

Transunion, Equifax, and Experian are the three major credit reporting agencies. Creditors use the financial information these credit agencies collect to help them decide whether to loan you money, for example. Therefore, checking your credit report regularly for potential errors is essential. You can request a copy of your credit report for free by going to

Power Financial Credit Union Can Help

At Power Financial Credit Union, we've been helping our members in South Florida achieve their borrowing goals for more than 70 years because we rely on more than our member's credit scores. That is one of the advantages of membership. We take the time to get to know our members, so they are more than just a number. Ask a Power Financial Credit Union specialist for more information about how to build your credit score today.