4 Great Ways to Build Credit Without a Credit Card

Ever wondered if it’s possible to build up your credit score without relying on a credit card? CARD has some good news: YES it’s possible, and you can start today! 

If you don’t find yourself in the position to commit to a credit card, or your current score makes it difficult to qualify, you definitely have other options. And you’re not alone! 

🪜 In fact, according to Experian’s 2021 data, over 30% of Americans have what’s called “subprime” credit. The threshold for “subprime” isn’t always the same, but generally it’s a score below 670. Falling into this category can keep you from getting the best interest rates and cause lenders to consider you higher-risk. 

🦠  Plus, COVID-19 is still putting a strain on the economy and Americans’ day-to-day financial lives. A  Bankrate study found that 42% of Americans with credit cards are now deeper in debt than they were before the pandemic. Of this group, 47% reported owing more each month directly because of COVID-19. 

☀️ Here’s the sunny side! Despite these challenges, four percent fewer Americans fell into the “subprime” credit category in 2021, and you can improve your credit too! 

Whether you’re looking for credit card alternatives or additional strategies, CARD made this guide for you 🥰. Here are 4 ways you can build your credit without a credit card… 

A quick summary of how credit scores work

Your credit score is a big deal – it can determine how much money you’re able to spend and save over your financial lifetime. There are three major credit bureaus that keep track of and report on your creditworthiness: Experian®, TransUnion®, and Equifax®. 

A credit score is usually represented as a number between 300 and 850. This number range is based on the FICO model, which is the most commonly used scoring system that lenders look at to evaluate your credit.  

Keep in mind: Your credit score isn’t written in stone! When a bureau reports your score, it only reflects the status of your credit at that one moment in time.

It will change over time – just like the circumstances of your life!  Different bureaus and companies use different data and formulas to calculate credit scores. For these reasons, your number may be different every time you check your credit

What is considered a “good” credit score?

Basically, a score of 670 and below is considered less-favorable. If you hit 740 you’ve entered “very good” territory. Anything above 800 is considered exceptionally awesome, but doesn’t necessarily need to be your goal. 

After all, only about 1% of Americans have a perfect FICO credit score (“The Elusive 850”), and you can earn good rates without reaching perfection

The bottom line: You don’t need sky high scores to achieve your financial goals. To find out what your exact score means and how you can improve it, do a little research.

Check out this Experian guide or this NerdWallet summary for details on credit score ranges and how they can affect your wallet. Read on to learn about some credit-building methods you may never have heard of…

How are credit scores calculated?

Specific answers to this question vary by person, by bureau, and by company producing the score. Most credit scores are generated by two big names: FICO and VantageScore. Take a look at this Forbes article to dig into the difference between the two companies’ metrics. 

Your credit score is determined by several factors including: history of reliable payments, how long your credit history is, how much debt you’re in, what types of credit you’ve used, and how many new accounts you have. 

You can read all the percentage breakdowns here, but in a nutshell, payment history isn’t the only thing that decides your credit score. 

A solid 20% of your credit score is calculated based on how diversified your credit history is and how many new accounts you open. They’re looking for a mix of different types of credit, meaning installment loans (car, house, student, etc) as well as revolving credit (ie: credit cards).   

Credit score recap

In general, making timely credit card payments is the fastest way to build credit, but credit card companies aren’t the only ones who report to credit bureaus. Different types of loans and timely payments on your monthly expenses can help you out! 

Here’s how you can make a difference in your credit standing with car loans, student loans, rent, and even utilities & monthly expenses… 

1. Does financing a car build credit?

Yep, getting a loan for that sweet new ride and making timely payments is a great way to build credit. 

Note: Right after you sign any loan (including an auto loan), your credit score could dip a few points. This is completely normal and happens when a lender puts a hard inquiry to your credit report. 

But never fear! Your on-time payments over time can definitely make up for any lost points at the beginning. After all, about 35% of your credit score is based on payment history (and reliability), and this includes payments on car loans. 

Also remember that about 10% of your score is based on how many different types of credit you have. If you don’t already have an installment loan, signing a car loan will diversify your credit and improve your score that way too! 

How quickly you see credit recovery while paying off a car depends 100% on your current score and individual credit history.  However, paying your monthly car loan installments on time can help your credit bounce back over time. 

2. Do student loans build credit?

Student loans are another type of installment loan and, you guessed it, they can help build your credit. And let’s be real, college is very, very expensive these days.

Whether you’re still in school or graduated, if you’re paying off student loans, you aren’t alone. Over 47 million Americans are actively paying off student loans in 2021. 

Note: Before you sign onto any loan, do your research and keep your own financial independence in mind. Here’s a Consumer Financial Protection Bureau guide to choosing the right student loans and payment plan for you.  

Just like with auto loans, making timely payments on student loans helps improve the payment-reliability part of your credit score. Student loans will also diversify your credit history as installment loans.

As an added bonus, student loans can help build your credit in a third way! Another 15% of your score is based on the length of your credit history. Having a longer credit history means bureaus have more data on how you make payments, and can consider you a lower-risk borrower. 

Since student loans are usually structured for payment over many years, they provide a great opportunity to prove your long-term financial responsibility! 

3. Does paying rent build credit?

We have lots of things that we pay for every month that aren’t installment loans, and a big one is rent. In fact, 36% of the nation’s 123 million households rent instead of own their home.

And it turns out, in 2021 you don’t need a mortgage to build your credit! 

Let’s say you’ve never paid your rent late once, you deserve some props for that, right?  Unfortunately, rent payments are not automatically factored into your credit score – enter companies like RentalKharma, Rent Reporters, and LevelCredit. 

You can’t report your rent payments to credit bureaus yourself, but you can have these companies do it for you (at the cost of signup/monthly fees). All three major credit bureaus will factor rent payment information into your score if they receive it, so why not take advantage?

Some rental management companies already use credit reporting services, and you might be able to get your rent-reporting fees covered. Get in touch with your property manager to find out. 

Paying rent on time and reporting it to credit bureaus will help build your payment reliability and can improve your score. For more details on how to choose the right rent-reporting service for you, check out this NerdWallet article

4. Does paying utility bills build credit?

In the recent past, the answer to this question would have been a definitive “no.” Credit bureaus usually don’t look at bills of any kind unless they are delinquent.  That’s all changed in the last few years.

Here’s how you can improve your credit score with utility bills (without necessarily charging them to a credit card). 

Both FICO and Experian now have add-on features that will factor bill payments into your credit score to help improve it. With UltraFICO or ExperianBoost, you can report your bill payments for internet, cable, cell phones, trash, power, and more! 

Even report your monthly payments to your favorite streaming services like Netflix, Hulu, HBO, and Disney+. 

Note: Both companies report that these types of bill-pay credit-building features are most effective for credit scores on the lower end (below 600). Do your research to find out if this service is right for your and your unique credit history.

Find some more details on FICO and Experian’s bill boosters here


When most people think of “building credit” their mind immediately goes to credit cards, but there’s so much more to the world of creditworthiness! 

Your credit score is always changing, and will look different based on what stage of life you’re in, so try to keep your expectations realistic. Life happens, and you aren’t the only person who doesn’t have a perfect 850. Everyone has the potential to make their credit better, no matter their history. 

Use these methods, keep doing your research, believe in yourself, and start improving your credit today – no credit card required 😉 . 

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