Six Ways to Build Credit without a Credit Card

Taking out a credit card is one of the easiest ways to build credit. But what if you can’t get one or would prefer to avoid them?

The good news is that you can still effectively build credit without the need for a credit card. Below is a mixture of methods, including opening up different types of credit and also making small changes to improve your credit score over time. 


Best ways to build credit without a credit card

1. Pay your bills on time and in your name

One of the single most effective ways to build or improve your credit is to make sure you’re paying bills on time each month. Falling behind on payments can harm your credit score, especially if it happens multiple times. 

If you’re currently struggling, a new budget may be in order, or you may need to increase your salary either by switching jobs, getting a side hustle, or asking for a pay raise to keep out of the red. 

Similarly, make sure that some of your monthly bills are in your name. Some people who house-share with others will have the bills in other people’s names. However, this means that you’re not building up a history of good repayment behavior. Consider switching some bills to your name so you can start building your credit history. 

2. Take out a personal loan

Rather than applying for a credit card, you could opt for a personal loan instead. A personal loan has a variety of uses. People can use personal loans for clearing debt, funding home renovations, paying for medical bills, vacations, weddings, or buying a car. 

Personal loans have a loan agreement where you agree to pay off the balance by a certain date and meet fixed monthly repayments until you’ve cleared it.

Personal loans are available from online lenders and traditional creditors such as banks. You can apply online in most cases and get an instant decision. 

If you’re trying to build credit, it’s wise not to overstretch yourself . Just make sure you can comfortably meet monthly repayments without falling behind, as this can damage your credit score. 

3. Use a credit builder loan

Some people apply for specific credit builder loans with the intention of repairing any damage to their credit history. It’s also an option for those who have zero credit history and are looking to start building one.

A credit builder loan is something that banks and credit unions sometimes offer. They don’t work like traditional personal loans. Instead, the lender puts an amount of money into a special savings account. You have to repay this balance within six to 24 months in most cases.

The catch is that you can’t access these funds until you’ve paid them off. In the meantime, your monthly payments are reported to credit agencies, so they know that you have a history of on-time payments. 

This method only works if you can make those monthly repayments in full and on time. If you fall behind on payments, it could negatively affect your credit. 

4. Subscribe to a phone plan

Another way to build credit is to subscribe to a phone plan. Phone plans usually have a fixed monthly cost which pays off the cost of the phone and provides you with a plan, including data, texts, and calls each month. 

As you are technically financing the phone, this is a good way to build credit because it shows you can meet monthly repayments. 

5. Become an authorized user

If you don’t yet have any credit cards or loans in your name, consider becoming an authorized user on someone else’s account. 

You could become an authorized user of your partner’s, parent’s, or even friend’s account. When you become an authorized user, you get a card of your own and can make charges on this account (with permission). 

Your repayment and transactional behavior will be reported to the credit bureaus along with that of the owner of the card. This can help you build credit, but there are risks you need to know about.

Tying your finances with someone else’s is always risky. If you or the card owner uses the account irresponsibly, that behavior affects the other person’s credit. This can cause some tricky relationship issues, but it can also damage both of your credit reports. Be sure you only enter into this agreement with someone you trust.

6. Repay your existing loans

If you have existing loans, then one of the simplest ways to build your credit or repair it is to come up with a debt repayment strategy.

Falling behind on loans or having multiple loans to manage can mean that your credit score doesn’t improve as fast as you’d like. One way to repay your existing loans is to take out a consolidation loan to combine multiple loans into one and potentially save on interest.

Other methods include the snowball or avalanche debt repayment methods. In these methods, you focus on either your highest interest or smallest debt first and make additional payments on that, so you clear it faster. Once it has cleared, you can move on to the next and build momentum each time you clear a debt. 


Keep an eye on your credit

In your aim to build your credit, make it a habit to check your credit reports to see how your score is improving. Not only will this help you stay motivated, it’ll also help you notice any potential errors on your report.

Sometimes errors crop up that can affect your score, and most people don’t notice them. However, the longer you leave an error on your report, the greater the potential damage to your score. Make it a habit every quarter or six months to give your credit score a quick check. You can check your credit score directly with credit agencies such as Experian or other credit scoring websites, such as Many are free to use, but some will require subscriptions to access ongoing credit reports. 

Any errors you find must be quickly reported to the credit agencies — Experian, Equifax, and TransUnion — so they can open an investigation for you. 

By staying aware of your credit and using some of the above credit-building methods, you can start to build a healthy financial history. This can help you apply for credit, such as for student loans or a mortgage loan, in the future. 

Just know that for the above methods to work, you must keep up with monthly repayments and bills to prevent any further damage to your report.

Ready to change the way you pay?

Order a Card today, and you’ll receive it in the mail within 7-10 business days.

Subject to card activation and ID verification.*