Can You Build Credit Without a Credit Card?

by Allison Wignall on June 25 2021

You’ve probably often heard that a credit card is absolutely necessary in order to build your credit. While it does make the task much easier, it isn’t 100% needed in every scenario. There are other ways to build your credit up, including these three tactics.

Get a Loan

There are a few different types of loans that you may possibly quality for even without credit or a credit card. Your first choice is a credit builder loan. These tend to range between $300 and $1,000. The lender will place the money into a secure account for you and you begin paying the amount back, unable to access it just yet. Once you pay off the entire loan through fixed monthly payments, you get the full amount. The lender will then report your good payments to major credit bureaus.

Other loans that could help you build your credit are personal and car loans. Although it may be difficult to get these if your credit is bad or low, if you can, they can be excellent for increasing your credit score without the need of a credit card. You should also be working to pay off any existing loans you have whether they be personal or student.

Pay Your Bills on Time

One of the best things you can do to build your credit up is to pay your bills on time. Failing to make a payment or making one severely late can have a huge impact on your credit score. You will want to be sure you’re covering your rent or mortgage, utilities bills, cable, internet, loan payments, and any other reoccurring expenses you have each and every month.

If you feel like you’re falling behind and are worried about being able to pay on time, make sure you look into budgeting apps as well as scheduling apps that will help alert you when a deadline or due date is approaching.

Become an Authorized User on Another’s Card

Although you don’t have to get a credit card for your own use, you can absolutely ask a family member or friend if you can become an authorized user on theirs. You will get a card that gives you access to the credit card’s cash and no credit check will be needed. Any payments made on the card will be attributed to both you and the main cardholder’s credit score.

It’s important to have a discussion with the main cardholder before signing on for this. They should make the best decision for their finances, as should you. You also don’t want to wrack up their credit card debt. And if one of you fails to pay, both of your credit scores will be damaged.

Can You Build Credit Without a Credit Card?

A credit card is definitely an easier path to building up your credit. However, if you don’t want one, it’s not the only option. Whether you become an authorized user on a family member’s card or opt to take out a personal loan for yourself, there are routes available to you that may better serve your financial wants and needs.

We hoped you enjoyed this article! Remember, you can and potentially lower your monthly student loan payments and save money.