November 6, 2020

How to Build Credit Without a Credit Card

How to Build Credit Without a Credit Card


When you think of ways to build credit, credit cards are likely one of the first things that come to mind. After all, the average American has four cards, making them one of the most popular ways that people establish and improve their credit score.

Credit newbies often start out with a secured credit card, but plastic isn’t the only way to begin. You may be able to get credit for rent and utility payments that you’re already making, or you might consider opening a loan designed just for credit builders.

Each option has pros and cons, but if you want to avoid the potentially high interest rates of credit cards, there are several different ways to begin that don’t involve getting a card in your name.

Here are some ways you can get started establishing credit.

How to build credit without a credit card

Get credit for eligible bills with Experian Boost

Experian Boost™ is a free service that lets you get credit for paying eligible monthly bills on time. Traditionally, eligible payments were limited to utility and phone bills, including internet, gas and water bills. However, Experian Boost recently added select streaming service payments, including Netflix®, HBO™, Hulu™, Disney+™ and Starz.

Learn more about how Experian Boost can help raise your credit score for free.

Take out a credit builder loan

A credit builder loan is an installment loan with fixed monthly payments, similar to a personal loan, auto loan and mortgage. But unlike a typical loan that grants you access to cash upfront, your lender deposits the amount of the credit builder loan into a savings or CD account that you can’t access until your loan is paid in full.

On-time payments you make toward your credit builder loan are reported to the credit bureaus and can help you establish a credit score. Credit builder loans aren’t our top choice for building credit since you’re unable to access the money from your loan until it’s repaid.

Pay installment loans on time

Get credit for your rent

If you’re a renter with a history of positive payments, you may want to use a service like Rental Kharma or Rent Reporters that reports your credit information to the credit bureaus. These services typically require verification with your landlord and charge a registration and monthly fee. Rental Kharma has a one-time $50 account setup fee and $8.95 monthly fee, while Rent Reporters charges a one-time $94.95, then a $9.95 monthly fee.

Before you sign up for a service, check with your landlord to see if they already report your payments to the credit bureaus. This can help you save money, while potentially raising your credit score.

Bottom line

Once you’ve had at least one account open and on your credit report for six months, you’ll establish a FICO Score, making your consumer behavior visible to potential lenders. And the longer you maintain a positive payment history and manage your credit accounts responsibly, the better your credit score will be. Good and excellent credit scores are key to receiving the best rates and terms on new financial products and can save you money in the long run.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



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