How to Build Credit Without a Credit Card

Learn how to build credit and improve your score in other ways.

Having a positive credit history and a good credit score is important when you are applying for a bank loan, credit card, job or insurance coverage. If you have poor credit — or no credit at all — you’ll have fewer or no loan choices, have difficulty being approved for credit cards and pay higher interest rates. Additionally, employers might question how responsible you are if you have poor credit.

One of the main ways to build credit is by opening a credit card and then paying your credit card bills on time. However, if you do not want to open a credit card, there are still other ways to build credit. Keep reading to find out how to build credit without a credit card.

1. Take Out a Loan From a Bank or Credit Union

If you’re wondering how to improve your credit score, one of the best ways to build credit is by taking out some type of loan. Taking out a loan from a bank or credit union — which can be a student loan, personal loan, mortgage or another type of loan — counts toward your credit history and credit score. Making loan payments in a timely manner and keeping the amount owed low will help build your credit.

You can also take out a “credit builder loan,” which is designed specifically for building credit. These loans are actually more like a small savings account offered by some banks and credit unions for people looking to establish or fix credit. The loan is backed by your savings account, and the loan is paid back in monthly installments. Once your loan is paid off, the lender reports this to the credit reporting agencies, which can help you build credit and improve your credit score.

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2. Pay Utility Bills on Time

Some utility bills are included in your credit report. If you have utility bills in your name, this can help to build credit. If you’re wondering how to build credit fast, making payments on time is one good way to do that.

3. Make Rent Payments on Time

Your credit score is determined by the three big credit reporting companies: TransUnion, Equifax and Experian. Experian uses rental payment and collection information in its credit report, so late payments and issues with a landlord could negatively affect your credit score. Conversely, making rent payments in a timely manner could contribute positively to your credit history.

4. Create Your Own Alternative Credit Report

If you want to know how to establish credit without a credit card, one way to do this is by building up your “alternative credit,” which includes the payment information associated with your everyday expenses such as phone, internet and utility bills, and subscriptions. Legally, a lender has to take alternative credit such as bill payment into consideration, according to the Equal Credit Opportunity Act. 

PRBC — which stands for Payment Reporting Builds Credit — is the largest nontraditional credit reporting agency in the world, and it can provide you with an alternative credit report. To obtain a report from PRBC, create an account with your full name and email address, and link your utility, phone, internet and subscription accounts so that they can collect bill payment information. You’ll receive your alternative credit score immediately. This score can be used when applying for a loan or line of credit at a car dealership, electronics and appliance retailer or furniture store. 

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