How to Build Credit Without a Credit Card

There’s a common misconception that signing up for a credit card has to be part of your credit score-building strategy. However, if you don’t want a credit card or can’t qualify for one yet, there are plenty of other options available. 

Many of these alternatives are designed for people who are starting from scratch or rebuilding. By taking advantage of these tools, you can exhibit consistent financial behavior that gets reported to the credit bureaus. 

Learning how to build credit without a credit card can help you strengthen your financial profile and become a more appealing applicant for financing. 

How to build credit without a credit card

If your goal is to build credit without a credit card, focus on tools that add on-time payment history to your profile. Making payments on time is the most important factor used by scoring models like FICO. 

You can build credit without a credit card in several ways. 

Credit builder loans

A credit builder loan is exactly what it sounds like. This financial product was designed to help people with new or rebuilding financial profiles work toward a higher score. Unlike a traditional loan, you won’t receive the money up front. Here’s how a credit builder loan works:

• The loan amount is held in a secured account
• You make fixed monthly payments
• Your payments are reported to the credit bureaus
• Once the loan is paid off, you receive the funds

You will have to apply, similar to a traditional loan. However, there is very little risk to the lender, as you pay off the loan before you get the money. 

Rent reporting

If you pay rent, you’re already making one of your biggest monthly payments. The downside is that property managers and landlords don’t typically report payment activity. If you want to get credit for paying your rent on time, you’ll need to sign up for a rent reporting service. These services help you:

• Build credit without taking on new debt
• Strengthen your payment history
• Potentially add months of history to your report

Kikoff offers rent reporting as part of all plans. You can turn verified rent payments into credit-building activity. 

Becoming an authorized user

Another way you can build credit is to become an authorized user on someone else’s account. Here’s how it works:

• A trusted person adds you to their credit card account
• Their payment history and account age may appear on your credit report
• You don’t necessarily need to use the card

However, this process works both ways. If the primary account holder misses payments, it can hurt your credit. If they maintain a strong history, it can help you build credit faster. Make sure you trust someone before becoming an authorized user on their credit card. 

Reporting utility and phone bills

Most utility and phone payments aren’t reported to credit bureaus, either. However, there are services that can change that. By reporting these bills, you can build credit using expenses you already pay. The goal is to add more positive payment activity to your report. 

Bills that may be eligible include:

• Electricity
• Water
• Internet
• Cell phone

Some services focus on reporting a single type of bill, such as electricity. Others may help you report multiple categories. 

How long does it take to build credit without a credit card

Building credit takes time, whether you use a credit card or not. There aren’t any shortcuts or “hacks.” Here’s what to expect:

• 1-3 Months: Your first accounts begin reporting 
• 3-6 Months: You may generate an initial good score 
• 6-12 Months: You should see a noticeable improvement 
• 12+ Months: Your credit history will get stronger and more established 

The best thing you can do to build credit is be consistent. Even one missed or late payment can stall your progress. If you stack multiple credit-building tools, you could see progress sooner because you are adding several positive tradelines. 

What to look for in a credit-building product

Not all credit-building tools are created equal. If you are looking for ways to build your credit score without a card, look for options that are low-risk and user-friendly. Here are some features to put at the top of your list:

• No hard credit check
• Reports to major credit bureaus
• Low or no fees
• Predictable payments
• A focus on positive activity

You may need to combine a few different tools to get all of the features and support you are looking for. As long as the tools fit your budget and support your financial goals, put them to use. 

Conclusion

If you want to build credit without a credit card, Kikoff is one of the top options available. Our credit-building platform includes several tools to help you strengthen your score over time. Key offerings are:

• A free Kikoff credit account
• Paid subscription options
• Rent reporting
• Secured credit card
• Invite-only credit builder loan
• Free dispute tools

Kikoff is a great resource for consumers who want to build (or rebuild) their credit scores. Build credit responsibly with Kikoff’s plans.