How to Build Credit Without a Credit Card

March 30th, 2016

Are you excited to build your credit, but not really excited about getting a credit card? Have you been searching for other options to establish your credit but they all lead back to the plastic? Credit cards and interest rates can be a very intimidating topic and it's understandable that you might be looking for other options to help build your credit. Here are the top five ways to build your credit that don’t involve a credit card.

Personal Loan from Bank or Credit Union

One of the most effective ways to build credit, if you have good banking history, is to take out a personal installment loan through your bank. As long as you are making your payments on time, it will help you build up a credit history. If you are worried about whether your bank will approve you, try getting the loan through a credit union, where they take other factors into consideration for your loan approval.

Be an Authorized User

A fairly uncommon but effective way of building credit without getting your own credit card is to become an authorized user on a close friend or family member’s credit card. This is only advisable if the person you plan to do this with has excellent credit. At any time, you can opt out of this option and the credit history would be removed from your credit report.

Federal Student Loans

If you are a student, you may be eligible for a federal student loan, and once you start making payments on it after you’ve graduated, it will help you establish credit. You won't need any credit history in order to take out a student loan, and they function like installment loans or personal loans, where, as long as you are paying on time it will positively build your credit. However, taking out a student loan solely to build credit, if you’re not a student, is probably not the best option.

Alternative Reporting

Paying your rent and utility bills on time is always a good thing, but wouldn’t it be better if it could positively help your credit score? Well it can, if your landlord doesn’t already report your on-time rent payments monthly, just report your rent payments yourself to, or All of these services work with Experian to report your rent to the three major credit reporting agencies. Another option to report your rent, utility bills, and even your phone bill, is to register and become a member of Payment Reporting Builds Credit (PRBC) and they will provide you with a free PRBC credit report and score.

Peer to Peer Loans

If you aren’t able to get a personal loan from your bank or a credit union, your next option would be to look into peer lending. No, this doesn’t mean asking a friend for money and setting up a payment plan in order to build credit. There are P2P lending companies, such as Prosper and Lending Club, that pair you with individual investors that will loan you the money you need and report to the major credit bureaus in order to help you build credit. One of the cons of this option is that the interest rates tend to be much higher than personal loans from your bank.