Building Your Credit Without Credit Cards

Woman feeling happy building credit

Having a good credit history is crucial. It is usually necessary when renting a home, buying a car, setting up new utility accounts or even while making relatively smaller purchases like a cell phone. So do you have to have credit cards to build a credit score or history? Yes, there are multiple ways to build from scratch a good credit score.


While credit cards are considered to be the primary means for building credit, the lucky truth is that only a small portion of an individual’s credit score comes from these. Anyone who cannot, or doesn’t want to, have a credit card can still build a great credit score!

Become An Authorized User

authorized user his credit card

For those on the starting point of building a credit score, or for anyone not yet eligible for their own credit card, one of the easiest ways to build credit is to become an authorized user on a family member’s account. This is where you also get a card and are an authorized user on the account, although while the ultimate responsibility of the repayments stays with the original account owner. By doing this with someone who already has a good credit score, the card’s activity will be reported on both your accounts and you will get to build your own credit.

Get A Co-signer

An off-shoot of this approach is also to get a co-signer. Getting a home loan or an auto loan is an excellent way to start building your credit history. But if you find it difficult to get a loan for yourself because you don’t have a credit history, you can get someone else to co-sign your application for a loan. Then when you make your payments on time, your credit score builds up. However, in both these cases, do remember that when you ask someone else to take your responsibility, you in turn are responsible for their credit score as well. So be mindful of the risks while choosing the account owner or a co-signer, and be careful with your own payments as well.

Pay Your Bills On Time

You most likely are paying bills to some credit authority or bank. It may include a car loan, student loan, possibly some medical debt or another form of personal loan you borrowed. One of the easiest ways to build credit scores is to start paying the amounts due on time, every time. Each transaction that you make on an installment loan is reported on your credit report, and just like a late or missed payment can make your credit score bad, a timely payment can push it back up.

Here, you can also make use of certain rent reporting services and include your utility payments in your credit history. If you are a regular and timely payer of your utility bills, that can also help you in building credit.

Apply For Credit Builder Loans 

A credit-builder loan is a loan that was created specifically to help people build or establish credit. They exist primarily to tackle the difficulty of the loop of not being able to borrow because you don’t have a credit score, and not having  a credit score because you haven’t  borrowed.

Man applying for a credit builder loan

These credit-builder loans are low risk products, specifically designed to help you build credit. It may be easier to understand them as a hybrid of a loan and a savings account. You don’t actually get the money in your hand right away. You set up a monthly payments schedule and you start making payments. Once you have made all your payments and reach the end of the agreement, you get the funds. The payments you made build up your credit score and at the end of the day you have the money that you have been paying, in the form of savings.