Contrary to popular belief, you don’t need a credit card to build a positive credit history. Your credit score is generated from credit reports, which reflect far more than credit card accounts. Loans, rent payments, utilities and even some subscriptions can all contribute to your credit profile, depending on how they’re reported and which scoring model a lender uses.
So whether you’re starting from scratch or regrouping after a rough credit patch, you have options for how to build credit without a credit card – all without adding a stack of plastic to your wallet.
- Credit cards are a common way to build credit, but they’re just one of many avenues. Installment loans, rent payments and being an authorized user on someone else’s credit card all count too.
- Not all alternative reporting (rent, utilities, cell phone bill) reaches all three major credit bureaus, so this varies by lender.
- Consistency is more important than speed. Plus, it can take up to 6 months to generate a scoreable credit file, depending on the scoring model.
Can You Have A Credit Score Without A Credit Card?
Yes, and millions of Americans do. A credit score requires at least one account on your credit report that has been open for at least 6 months and reported to a bureau within the last 6 months. That account doesn’t need to be a credit card, though. Being an authorized user or taking out a student loan, an auto loan or a credit-builder loan all qualify.
More lenders are counting alternative data – such as rent, utilities and phone bills – but these items don’t automatically appear on all reports from the three major credit bureaus: Equifax, Experian and TransUnion. Using this data to generate a scoreable credit file requires an extra step (more on that later).
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Top Options For How To Build Credit Without A Credit Card
Here are alternatives to consider if you want to create a credit file without using a lot of cards.
Credit-Builder Loans
A credit-builder loan works differently from a traditional installment loan. Instead of receiving money up front, you make monthly payments into a secured account, and the lender provides funds to you once the loan is paid off. The lender reports each payment to the credit bureaus, which helps establish and build your credit.
Many lenders report credit-builder loans to all three credit bureaus. You can find these types of personal loans at credit unions, community banks and online lenders, with shorter terms (6 – 24 months) and small loan amounts, usually under $1,000.
How it helps: Payment history makes up 35% of your FICO score, accounting for the lion’s share of your score’s calculation. Consistent on-time payments on a credit-builder loan directly strengthen it.
Timeline: Borrowers usually see a scorable file within 3 – 6 months after opening a credit-builder loan.
Becoming An Authorized User
An authorized user is someone added to another person’s credit card account. You receive a card in your name, but the primary cardholder is responsible for payments. The account’s history, including credit limit, balance and payment record, typically appears on your credit report and is reported to all three major credit bureaus.
However, there’s a downside: You’re relying on the cardholder’s behavior (for better or worse) to impact your score. If the account holder makes late payments or has a high credit utilization rate, being an authorized user might actually hurt your score.
How it helps: The account’s long payment history and credit limit appear on your report, potentially giving your file an instant boost. This is especially useful if the primary cardholder has a long, clean credit history.
Timeline: It typically takes just 1 or 2 billing cycles for a credit card account on which you’re an authorized user to show up on your credit report, making it one of the fastest ways to build credit.
Secured Loans
Secured loans are backed by collateral (such as a car or a savings account), making them easier to qualify for without an established credit history. These products are a core component of your credit mix, which accounts for 10% of your credit score.
For instance, an auto loan is a common first secured installment loan. Installment loans are repaid with fixed payments over time and can involve secured or unsecured debt (the latter isn’t backed by collateral). If you manage an auto loan responsibly, that works in your favor. Auto lenders and most secured loan lenders report to all three credit bureaus.
How it helps: It adds an installment account to your credit mix and builds payment history.
Timeline: It can take 3 – 6 months of on-time secured loan payments to establish a pattern on your credit report.
Rent And Utility Reporting Services
Rent is typically the largest monthly expense most people have. Despite that, it hasn’t traditionally appeared on credit reports unless a landlord or third-party service reports it. Several services now offer rent reporting, including:
- Experian Boost: A free tool that links your bank account and adds on-time utility, phone and streaming payments to your Experian report only.
- Self, Rental Kharma and Rent Reporters: Services that report rent payment history to all three bureaus, usually for a monthly or one-time fee.
- Rent Track and PayYourRent: Platforms that process rent payments and report them to all three credit agencies. However, these typically require your landlord’s participation.
How it helps: The impact of reporting rent payments on your score depends on the scoring model. Credit-scoring systems, like FICO and VantageScore, each offer different versions of their scoring models – with newer versions more likely to consider rental data. FICO 9, FICO 10 and VantageScore 3.0 and 4.0 can all factor in rental data when it appears on a report. However, older FICO models (8 and below), which many lenders still use, do not.
Timeline: Some services (like Experian Boost) update your report immediately, while others take 1 to 3 months to appear on your credit report and establish a clear history.
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How FICO And VantageScore Treat Non-Traditional Data
Not all credit scores are created equal, and the distinction matters when you’re building credit outside of the box. Here’s a quick rundown of various models and whether or not they accept alternative data.
| Scoring Model | Considers Rent Data? | Considers Utility Data? |
|---|---|---|
| FICO 8 | No | No |
| FICO 9 | Yes (if reported) | Yes (if reported) |
| FICO 10 / 10T | Yes (if reported) | Yes (if reported) |
| VantageScore 3.0 | Yes (if reported) | Yes (if reported) |
| VantageScore 4.0 | Yes (if reported) | Yes (if reported) |
Results from rent and utility reporting can be inconsistent. Plus, what you see on your credit reports when you pull them and the version your lender is using can vary widely, depending on the specific scoring model. The safest bet: Use rent and utility reporting as a supplement to, not a replacement for, traditional credit-building methods.
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How To Build Credit If You’re Starting From Zero
No credit history? No problem. Here’s a step-by-step general plan to start building your credit file.
1. Explore becoming an authorized user. Ask a parent, sibling or close friend with a strong credit history to add you to their oldest, lowest-utilization card. This is a fast path to generating a scoreable file.
2. Open a credit-builder loan, too. A 12-month credit-builder loan from a credit union or service such as Self runs parallel to the authorized user account, building your own independent payment history.
3. Set up rent and utility reporting. Start with Experian Boost (it’s free) and look into a low-cost rent reporting service if your landlord doesn’t already report. This widens the data on your file.
4. Keep the status quo for at least 6 months. Avoid applying for any new credit or loans in the interim so your accounts have time to age and generate a solid baseline before adding more credit.
5. Check your reports after 6 months. Visit AnnualCreditReport.com to confirm all accounts are reporting accurately and that there are no errors blemishing an otherwise clean file.
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Common Mistakes To Avoid As You Build Credit
- Applying for too many accounts at once: Every credit application triggers a hard credit inquiry. Multiple inquiries in a short window are a red flag and can temporarily lower your score. Build credit methodically, not overzealously.
- Missing a single payment: Payment history is the dominant scoring factor. One missed payment can set back months of progress. If possible, set auto-pay for the full balance, or at least the minimum, on all accounts.
- Closing the authorized user account too soon: Removing yourself (or being removed) from a long-standing account before you have built your own history negates the benefit. Keep it active until you have at least 12 months of your own account history.
- Assuming rent reporting works everywhere: Experian Boost applies only to scores that pull from Experian. If a lender uses TransUnion or a FICO 8 model, that lift is invisible. Don’t rely on rent reporting as your sole credit-building strategy.
- Ignoring your credit report entirely: You can’t fix errors you don’t know about. Check all three bureau reports every few months, especially early on. Errors like incorrect account info, mistaken delinquencies or mixed files (as in, credit info about someone with the same name as yours) are more common than many people think and can stall your progress.
- Confusing a debit card with a credit-building tool: Debit cards, prepaid cards and bank accounts do not appear on credit reports and don’t build credit history.
Bottom Line: Your Credit Score Isn’t About What’s In Your Wallet
Building credit without a credit card takes a bit more intentionality and work, but the result is the same. A credit-builder loan and an authorized user account can get you from 0 to a scoreable file in about 6 months. Add consistent rent reporting and a disciplined approach to installment debt, and a strong credit score is within reach in a year or two.
Looking to start your credit journey? Explore your credit card options today..
Deborah Kearns
Deborah Kearns is an award-winning independent journalist with more than 15 years of experience covering real estate, mortgages and personal finance. Her work has appeared in the Wall Street Journal, Kiplinger, U.S. News & World Report, Quartz, CNN, Forbes, Fortune, Newsweek, The Associated Press and dozens of other outlets. She previously led content and communications at a Top 15 national mortgage company and held writing and editing roles at Bankrate, NerdWallet, LendingTree and RE/MAX. She holds a bachelor's degree in journalism from the University of Florida and a master's degree in public relations from Ball State University.
