No Credit Card, No Problem: Best Ways to Build Credit Score

With a traditional credit card, you can manage your financial condition better, get more rewards, and build credit. Over time, you can expect satisfactory financial freedom.

However, if you do not handle your credit card responsibly, you will risk significant credit loss and even fall into major credit card debt. This concern makes many people wary about building credit with credit cards. In reality, though, there are ways to build credit that do not require one to have a credit card at all. This article will discuss the best methods to build credit, whether you had a credit card before or not.

Available Credit Types:

Before we get into our discussion on the available ways to build credit without a credit card, you should be aware of your choices. Then, plan what strategies to use for building credit and consistently follow them.

The types include:

Open credit

Expenses like rent and utility payments fall under the open credit category. The account holder has to make consistent on-time payments per month as per the set balance decided in their service plan. No interest is charged on utility payments, and the account usage details here do not go to the three credit bureaus. However, the utility provider can report unpaid bills to the major credit bureaus if the account holder does not pay bills on time.

Example: Rent and utility payments like water/sewage, electricity, gas, TV/phone bills, etc.

Installment loans

With this credit model, borrowers make monthly payments per the decided terms, like interest rate and loan duration. Examples of installment loans include mortgages or auto loans.

Examples: personal loans, student loans, car loans, mortgage loans, etc.

Revolving credit

In this type of credit, there is a credit limit that the borrowers get each. They can use any amount of this available credit limit at their discretion. However, if they carry over the balance, interest rates apply. Credit cards run with the revolving credit method.

Example: HELOC, credit cards

What influences the credit score?

Now that you know the credit types, you might wonder which method to use for building credit without a credit card. But first, you must understand what it means to build credit and the relevance of credit scores in this context.

The credit score is a numerical value between 300-850, determining your creditworthiness to lenders. As per the three major credit bureaus, a higher credit score shows that you use credit types like a credit card responsibly and have a positive payment history. Then, you will become eligible for better credit builder loans with high-interest rates.

So, it would be best to prioritize building a solid credit history, which will appear on your credit report. With an established credit history, you can showcase that you can repay the loan payments on time.

Determinants of strong credit: what contributes to the score?

It would help if you showed a high credit score to build a proper credit profile. In this context, credit card issuers look at five elements:

Category Meaning Additional note Rate of relevance for credit score
Payment History The borrower's payment history shows how well they pay bills as scheduled. Your credit score will decrease if you do not pay off your bill even 30 days after the due date. 35%
Owed Amount This covers your credit utilization ratio, i.e., the percentage of your total available credit against the amount of it being used that you will owe to lenders. Making all your payments on time for all your available credit accounts will lower your credit utilization ratio, increasing your score. 30%
Credit History Length This shows the total time of active credit accounts. The measurement of this term duration starts from the time the borrower opened the credit account. Closing down a long-running credit account will negatively impact the borrower's credit score. So, keeping your credit account active as long as possible is better. 15%
Credit Types Used This covers all of the credit types you have active at the time. The credit bureaus take note of the three mentioned credit types (open/installment/revolving credit). For example, if you have a HELOC (home equity line of credit), one mortgage loan, and one active student loan, they will all be under this category. Keep a mix of many credit accounts, as that will give you a higher credit score. 10%
New Credit The credit bureaus take into account how recently you opened a credit account, when you last applied for a credit check, etc. Avoid opening too many credit accounts, as well as not opening any new accounts at all. Keep a balance. 10%

The five categories mentioned influence the credit score of a borrower. All of them cover separate matters that are interconnected, so any changes on one can affect the other. For example, if you do not make on-time payments, it will reflect on your credit history. That will reduce your credit score and increase your risk for debt. But if you make timely payments, your score will improve.

If you cannot apply for credit cards because of a bad credit history, you can use strategies like debt consolidation to get out of debt. But there are other ways to build credit without a credit card as well that you can try.

10 Ways to improve your credit even without a credit card

If you do not own a credit card because of an adverse credit history or have just reached the eligible age for applying, you can build your credit with the following strategies.

Pay off existing debts.

You need to showcase a good credit utilization ratio to get a higher score since the credit bureaus consider it seriously. In fact, this value accounts for 30% of the FICO score.

The credit reporting agencies want to see that the borrower is using a small portion of what credit is available to them. Your credit score will improve to some extent if your credit utilization ratio is under 30%. You should aim for 10% of credit utilization for optimal score increase. Pay off the due balances on time monthly to ensure a low ratio.

Personal loans or credit builder loans.

You can get a personal or credit builder loan from a verified lender and then make timely loan payments per your decided terms. This is an unsecured type of installment loan that you can apply for even if you do not own a credit card. Pay the due amount on time to showcase a positive payment history and build credit accordingly.

You might have trouble applying for loans with low-interest rates attached to them if your credit profile is not good. But some lenders offer personal loans specifically for such applicants- check multiple personal and credit builder loan options before selecting.

CD loans.

Getting a CD loan will help you build credit if you still need to get a traditional credit card. You can apply for a CD (certificate of deposit) account or use your savings account information to get a CD loan. If you do not pay the dues fully, the lender will take the amount as security. So, ensure that you have some savings in place before getting this loan and continue making timely payments.

Auto loan.

Borrowers can apply for secured loan types like auto loans, which include keeping the car as collateral. If you default on your car loan payments, that will allow the lender to take the vehicle back to cover the loss.

Furthermore, obtaining a car loan is another effective method for boosting your credit score, even without a credit card. “When you secure a car loan, the lender reports your payment history to credit bureaus, providing an opportunity to build credit,” said Roy Lam, CEO and co-founder of GeniusHub Digital Marketing. “By consistently making on-time payments for your car loan, you demonstrate responsible financial behavior and establish a positive credit history.”

Make rent payments on time.

You should complete your monthly rent payments on time to ensure that the rental service provider does not report it to credit bureaus. That can cause a drop in your score. So, you can build a good credit profile without a credit card with consistent rent payments.

Credit-building tools like Experian Boost.

You can try out different credit builder tools to improve your credit. These include scoring models that count payments like utility bills, rental payments, phone bills, etc. “Companies like Experian Boost and UltraFICO allow individuals to include utility and telecom bill payment history in their credit files”, says Roy Lau, co-founder of 28 Mortgage.

“By regularly paying these bills on time, individuals can showcase responsible financial behavior and potentially raise their credit scores. Utilizing such credit-scoring alternatives is a unique approach to improving credit without relying on a credit card.”

Become an authorized user.

People with connections to more responsible credit card users can use their cards to make credit-based transactions. The official way of doing so is by becoming an authorized user.

“If someone close to you, like a family member or a friend, has an old credit card that they have consistently made on-time payments on, you could ask them to add you as an authorized user,” says Thomas Franklin, CEO and co-founder of Bitinvestor.

“However, keep in mind that each creditor has their own policy for reporting authorized users. For example, some creditors may only allow certain family members to be reported.”

Federal student loans.

The major credit bureaus do take note of the payment history for individuals with a federal student loan. So, if you have a student loan but no credit card, you can still build your credit profile with timely loan payments on this account.

You do not have to worry about maintaining an excellent credit score to apply for these student loans since they are available from the federal government.

Peer-to-peer loans.

Lenders report peer-to-peer loans to the credit bureaus in case of late and on-time payments. Higher interest rates are available for these loans, but borrowers get a higher credit limit on these loans than credit builder loan types. So, you can expect better flexibility with this loan type when trying to build your credit.

Secured credit cards.

People without a credit card can apply for secured credit cards for immediate access to credit. However, it is different from a conventional credit card in specific ways.

The credit card issuer does not face any risk when they approve a borrower for a secured credit card since it is a secured loan type. One has to prepare a security deposit first to get approval for a secured credit card. The credit limit on the card is the same amount you deposited. So, you must pay the due balance fully per month to slowly build your credit.


You can establish a good credit profile when you work on the factors affecting your credit score with your open credit accounts. Knowing these elements and how they impact your score will help you make reasonable credit-building efforts.

For individuals with no prior credit history and those with poor credit history due to wrong financial moves, multiple methods are available to build credit without a card. You should prioritize timely bill payments and follow good financial habits to build credit with time.


If you do not have a credit card, you can still build suitable credit with other alternatives like credit builder loans, rental payments, etc.

Typically, it will take a person 3-6 months to build a satisfactory credit even without a credit card if you make timely payments. You should consistently follow your credit-building efforts for the best results, like on-time bill payments for at least a year.

You can build credit quickly with:

  • Timely bill payments
  • Becoming an authorized user
  • Applying for a secured credit card
  • Applying for a credit builder loan
  • Eliminating all existing debt

The three major credit reporting agencies follow their specialized scoring model with FICO or other scoring methods. So, borrowers can see a different credit score than their FICO score in the credit report.

Credit card companies consider 18 years of age to be the minimum age limit for eligibility for credit cards.

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