Building Credit Without a Credit Card: 6 Alternative Strategies

Credit cards are a common tool for consumers to build credit, but not everyone qualifies for one or wants to open one. Fortunately, there are alternative ways to build credit and demonstrate responsible borrowing to lenders.

Factors that impact your credit score include the age and mix of your accounts, hard inquiries, how much you owe, and your payment history. These factors can be influenced without a traditional credit card.

Here are 6 ways to build credit without a credit card:

1. Become an authorized user: By being added as an authorized user on someone else’s credit card, you can have credit activity reported to credit bureaus without needing your own card.

2. Get a credit builder loan: These loans allow you to make regular payments without borrowing money outright, helping you build credit.

3. Apply for a personal loan: Making on-time payments on a personal loan can also improve your credit score.

4. Consider a car loan: On-time payments for auto loans are reported to credit bureaus and can help boost your credit score.

5. Apply for a secured credit card: Secured credit cards have lower approval thresholds and can help you build credit with a cash deposit.

6. Repay existing loans: Repaying loans like student loans on time can improve your credit score.

Additionally, reporting rent and utility payments to credit bureaus can also help boost your credit score.

To avoid hurting your credit, focus on making payments on time, keeping your credit utilization low, and maintaining the age and mix of your accounts.

While credit cards are common credit-building tools, they are not the only option. By following these alternative methods, you can build a strong credit history and open new financial doors.