How to build your credit without a credit card | finder.com

How to build credit without a credit card

From auto loans and mortgages to reporting services, you can boost your score without plastic.

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Credit cards can be one of the main tools if you’re trying to build or rebuild your credit. This can make things difficult if you’re someone who doesn’t like credit cards or trust yourself to use them wisely.

With that said, it’s actually a popular misunderstanding that credit cards are the only way to build credit. We explore some of the other ways you can boost your score without plastic.

Can I build a credit score without a credit card?

Yes. While secured credit cards are a good way to build or rebuild your credit with responsible spending, they’re not the only way.

Other types of credit contribute to a solid credit history or even flesh out a limited one, including personal loans and financing you might pick up at the counter of your local furniture store.

8 ways to build credit without a credit card

Typically, any financing product that reports to the credit bureaus can help you establish credit. Without solid creditworthiness, however, you might want to focus on unsecured options.

No matter the type of credit or financing you take on, commit to paying your bills on time. Late payments can quickly undo your hard work.

1. Auto loans

In most cities, you need a car to get around. And many of us don’t have the cash sitting around to buy one outright.

Auto loans are among the most popular types of financing, and they’re a great way to build credit. Because most loans treat the car you’re buying as collateral, you’ll typically get a competitive rate over other borrowing options.

2. Personal loans

Personal loans can be used for just about any legitimate purpose. But many use them to refinance or consolidate other debts, making them a popular tool when you’re building stronger finances.

If you aren’t able to get a loan on your own, look for lenders willing to accept cosigners to help you land a more competitive rate.

3. Authorized user on a credit card

If you can’t qualify for a card yourself or simply prefer not to take on the full responsibility, you might be able to piggyback on somebody else’s plastic.

A trusting loved one may be willing to add you to their credit card account as an authorized user. You won’t even have to use the card to reap the rewards. Instead, arrange payments based on whatever you and the cardholder agree upon.

However, not all card providers report spending and payments for authorized users, and the cardholder’s activity could end up on your credit report too. Only pursue this method with somebody you trust.

4. Credit-builder accounts

Many banks and credit unions offer loans to help you build credit. The bank secures the loan by placing the money you qualify to borrow into a certificate of deposit (CD) or savings account. You make payments to settle the loan and, after it’s paid off, you get access to the full amount of the loan.

Some banks also offer passbook or CD loans. These loans are based on the balance of your CD or savings account, locking your account until you finish repaying the loan.

Because they’re designed to build or rebuild credit, these tools are typically accessible to those with weak scores.

5. Student loans

Paying back your student loans can be stressful. But if you’re in a position where you need to finance your education, there’s a silver lining: These loans can do a lot of good for your credit score.

Like with other borrowing, the key is to repay your loans on time to contribute to a positive credit history and increase your score over time.

6. Rent-reporting services

Some services allow you to report your responsible rent payments to credit bureaus, building up your credit history. In some cases, your landlord might already report your payments.

Otherwise, look into services that let you pay your rent online. Companies like RentTrack allow tenants to schedule rent payments that it processes through your bank account, reporting the transactions to the credit bureaus and ultimately boosting your credit score.

7. Mortgages

If you own a home, your mortgage may already be strengthening your credit. The significant debt you take on when buying a home could decrease your score, but a consistent history of on-time payments can improve it over time.

8. Peer-to-peer loans

Peer-to-peer (P2P) loans are ways to avoid dealing with big lenders, like banks. With a P2P loan, you’ll borrow directly from an individual “investor.” These investors impose varying credit requirements, making it easier for people with poor or no credit to qualify.

While P2P loans aren’t processed through financial institutions, they’re often backed by reputable services designed to support these legitimate loans.

Check your credit report for errors that could damage your score

You’re entitled to a copy of your report every year from each of the three credit bureaus. This means that with planning, you can review your credit report for errors every four months.

You can dispute an error on your credit report directly with the credit bureaus. After you issue an official complaint, the bureau generally has 30 days to investigate the error. When the bureau has completed its investigation, it has five more days to report the results to you. Overall, you’ll wait up to 45 days for a response.

Get your score or rebuild your credit

Updated September 16th, 2019
Name Product Starting price Trial period Credit scores Credit monitoring Credit reports Update frequency
$19.99
30 days
TransUnion
Equifax
Experian
Yes
TransUnion
Equifax
Experian
Monthly
Annually
Get your credit report and FICO score for just $1 with enrollment in Experian CreditWorks credit monitoring. Cancel anytime.
$19.95
1 day
TransUnion
Equifax
Experian
Yes
TransUnion
Equifax
Experian
Monthly
Get quarterly access to your most widely used FICO® Scores and a 3-bureau credit report.
$24.95
No
TransUnion
Equifax
Experian
Yes
TransUnion
Equifax
Experian
Monthly
TransUnion credit score, monitoring and identity theft insurance.
$15.95
No
TransUnion
Equifax
Experian
Yes
TransUnion
Equifax
Experian
Monthly
Monitor your key business relationships to protect your company from losses.
$19.95
7 days
TransUnion
Yes
TransUnion
Monthly
$1 for a seven-day trial to get access to your credit score and credit report from TransUnion.

Compare up to 4 providers

Updated September 16th, 2019
Name Product Monthly Fee BBB Rating Customer Support Cancel Anytime
$25
A
Phone
Email
Online Chat
Yes
Save money and build credit with a secured-installment loan that you can access after 12 or 24 months.
$99.95
F
Phone
Email
Mail
No
Specializes in clearing your credit report of inaccurate items with all three credit bureaus.
$19
A+
Phone
Email
Yes
Get a free consultation to help identify erroneous items on your credit report.
$89.95
F
Phone
Email
Yes
Law firm that offers three tiers of credit repair suited to your situation.
Credit Firm Professional Credit Repair
Credit Firm Professional Credit Repair
$49.99
A+
Phone
Email
Mail
Yes
Professional credit repair service that can help you create a step by step action plan. Cancel anytime.
$79
C
Phone
Email
Mail
Yes
Professionals work with you to clean up your credit and raise your credit scores. Cancel anytime.
$79
C
Phone
Email
Mail
Yes
Free credit report and monitoring that comes with a 90-day money-back guarantee.

Compare up to 4 providers

Bottom line

You don’t have to rely on credit cards to rebuild your credit or improve your credit score. If you aren’t able to qualify or don’t trust yourself to use them wisely, consider other financing options that report your responsible spending to the credit bureaus.

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