Knowing how to build credit without a credit card requires thinking outside the box. While credit cards provide an easy way to build a credit history, they may not be ideal for everyone.
It can be too tempting for some people to have credit cards in their wallets. The last thing you need is to take on too much debt while building your credit history.
Whatever the reason, there are other ways to build a credit history as long as the alternative ways report to the three major credit bureaus.
How to build credit without a credit card
1. Get credit for phone & utility bills
Most utility companies, including your cell phone company, don’t report your monthly payment history to the credit bureaus. These essential utility bills are likely paid on time. That could be excellent monthly payment information if credit bureaus had access to it.
Experian Boost™ can help build your credit history for the utility and mobile phone bills you’re already paying. Experian offers a service where they score and report utility and cell phone you’ve been paying up to 24 months. This could instantly raise your credit score.
The only drawback is it will only impact your Experian FICO score. But it’s still a good way to build your credit history using obligations you already pay. Learn more about Experian Boost™.
2. Get credit for your rent
Build credit history using timely rental payments. Most landlords don’t report rental payment history to the credit bureaus unless there are issues with payment and you wind up dealing with a debt collector.
But your rent payments can be included in your credit history using third-party rent reporting services. These companies will report rent payments to help you establish or build credit history through timely rental payments.m
Millennials trying to build a credit history from scratch can benefit from a rent reporting service. It’s going to cost you a small monthly fee but it can be worth it to have positive information added to your credit reports.
Here is a rent reporting company to consider:
RentReporters can help you build and improve your credit by reporting rent payments to Transunion and Equifax credit bureaus. This service will cost you or just $9.95 per month plus a one-time $95.05 signup fee.
Here is how to build credit with the RentReporters:
- To sign up, you’ll need contact information for your landlord and the date you moved in.
- You pay rent to your landlord and you pay the RentReporters fee separately.
- RentReporters verifies with a landlord that rent was paid and then reports the payments to TransUnion and Equifax.
RentReporters doesn’t require its clients to pay rent online or change the way they pay their rent.
3. Get a credit builder loan
With credit-builder loans, the lender agrees to loan you a certain amount of money, which it deposits into an account. You’ll make monthly payments on the loan, and the lender reports those payments to the three major consumer credit bureaus — Experian, Transunion and Equifax — to create or add to your credit history.
When the loan is paid off, the lender gives you the funds.
People with no credit or bad credit can qualify for a credit builder loan because lenders don’t risk anything since they control the funds. Credit-builder loans can be a great way to establish a credit history.
4. Get a personal loan
With a personal loan, you borrow a fixed amount of money and make fixed payments every month. Personal loans can be used for a variety of reasons, but most common to consolidate debt and pay it off at a lower interest rate. Online lenders often look at more than your credit file to offer low interest personal loans for all credit types.
5. Get current on all credit obligations
Order your credit reports from all three major credit bureaus. If there are mistakes then start repairing your existing financial messes. If there are no mistakes examine your credit report to see which factors are most significantly influencing your score. You may be able to pay down debt which will give you a quick boost in credit scores or get your student loans out of default.
6. Use a Debit Card To Build Credit
The Extra card is a debit card that is designed to help build credit. The card issuer, Evolve Bank & Trust, reports debit card transactions to the three major credit bureaus (Equifax, Experian, and TransUnion), which can help establish a credit history and improve credit score over time.
The Extra card does not require a credit check to apply, making it a good option for individuals who may have a limited or poor credit history.