Yes, it’s true, you CAN build your credit score without your own credit card. If you already have a car loan or your cell phone line, you’ll have to get creative if you want to build your score without using your own credit card. Luckily, we have some ideas for you! 

Credit Score vs. Credit History

Before we get to these tips let’s cover some basics. There IS a difference between your credit score and your credit history. Your credit score is a nice, simple number that sums up how well you manage your credit and it’s NOT the only thing that lenders will look at. 

In fact, just about anytime you go to apply for a line of credit you will see a line on their website that says something like, “A credit score is just a portion of the information a lender will need. While it is usually a primary factor, it’s likely it’s not the only factor that will determine if your application is approved or not”. The lender is going to look at your entire credit history because it’s possible to have a really high credit score but a very thin credit history.

7 unusual ways to build credit without your own credit card

1. Report your Rent by signing up for RentReporters: 

How many points can I improve? 

Our customers typically see an average of 40 points increase in 10 days. 

What is RentReporters? 

Your rent is probably your largest monthly expense, but it doesn’t count towards your credit score and it’s not reported on your credit history. RentReporters reports your on-time payment history to the credit bureaus to give your score a nice boost. It’s just $9.95/month to keep your payments up to date with the bureaus, plus a one-time signup fee of $94.95. This investment can pay off big when you get to qualify for lower interest rates and access to better financial products. 

What are the pros and cons? 

A great pro for using RentReporters is that you DO NOT HAVE TO QUALIFY, this means there will not be a hard inquiry on your credit report and you cannot be denied. If you are a renter, you can add your rent payment history to your credit report to help build your credit history and improve your credit score. Our service is great for consumers with a thin credit history that has trouble getting approved for any credit offers or are looking to add their rent payment history in hopes of diversifying their credit profile to get approved for a mortgage or other loan offers. We can’t guarantee results for every customer, but we do have a satisfaction guarantee. If you’re not happy with your results, you can get your money back.

2. Become an Authorized User on Someone Else’s Credit Card:

How many points can I improve? 

Just like traditional credit cards, your credit will continue to improve as you make on-time payments. 

How to become an Authorized User? 

If you have a friend, spouse or family member with a credit card you can become an authorized user. This means the bank will issue you a credit card with your name on it that is connected to their account. When they use their credit card and pay it off, it shows on your credit report as well. If your friend is reluctant to have you as an authorized user, you can assure them that you don’t actually need to have the credit card in your possession, they can keep the card and you never need to use it, tell them you just want to be on the account to help build your credit. 

What are the pros and cons? 

Cautionary disclaimer, this can also go the other way too, if they aren’t responsible with their credit card, it can hurt your credit score just as much as it will hurt theirs… so make sure you trust this person before becoming an authorized user. 

3. Use Experian Boost to report Utility Bills and Subscription Services: 

How many points can I improve? 

The average Experian Boost user sees a 13-point increase. 

What is Experian Boost? 

Just like RentReporters can report your rent payments to the credit bureaus, Experian Boost can report your utility bills and subscription services. Experian Boost is a completely FREE service and easy to use. You simply connect your bank account to it and identify the subscription and utility bill payments, Experian Boost will take care of the rest, assuming you’re paying on time.

What are the pros and cons? 

The biggest pro for using Experian Boost is that there is NO cost. The service is free, whereas credit-repair services can cost you up to thousands of dollars and only allow you to remove errors on your credit reports.

It additionally can build poor or limited credit using alternative data. Experian Boost lets you improve your credit simply by paying utility and telecom bills on time. Just like with RentReporters, for those struggling with credit scores impacted by thin files or poor credit, this could be a much-needed step in the right direction. You also can’t go wrong with the chance at an instant score improvement. If you’re eligible for a score boost, you’ll get your new score instantly after you select the relevant payments you want to add to your credit report.  One con is that not all lenders accept the credit score. Experian Boost doesn’t contribute to all FICO scores, just your FICO 8.5. Most top lenders look at the FICO 8 score when determining whether to approve an applicant for a personal or student loan or retail credit card, but FICO 8 isn’t included in mortgage lending generally. You can also see a potential for minor score improvement or a score decrease. The boost you get may be small if you lack a robust history of utility or telecom payments. Likewise, you could see a score decrease once you link your bank account; however, you can always disconnect the bank account to revert your score. 

 4. Try using a Peer-to-Peer Loan Company: 

How many points can I improve? 

Peer-to-Peer Loans (P2P)  will tend to improve your credit score over time, and late or missed payments will hurt your credit score.

What is a Peer-to-Peer Loan? 

You can think of a peer-to-peer loan as a Kickstarter that you have to pay back and they tend to have an easier approval process. There is a tradeoff though, you might pay a higher interest rate so BE SURE that your interest rate isn’t too high before signing up. Some good use cases could be for any loan or leases where you would normally pay interest, like, home repair and upgrades, car repairs that you don’t have the cash for, or business loans. You don’t want to use these loans for something that is typically free and has free financing like a cell phone.

What are the pros and cons? 

Cautionary disclaimer, you should never go into debt for the sake of building your credit. However, if you need to spend money on something and it makes sense to finance it, a peer-to-peer loan might not be a bad idea.

5. Credit Builder Loans: 

How many points can I improve? 

With a Credit Builder Loan you can see upward of a 60 point boost in a short period of time

What are Credit Builder Loans? 

Credit Builder Loans are almost like a forced savings account that is reported to the credit bureaus. Here’s how this works, you apply for a loan, but instead of receiving the money and then paying it back over time, you make monthly payments towards that loan that then get held in an account for you. Once you make the final payment, the loan balance is released for you to withdraw. You cannot withdraw money from this account until it is paid off. You can use the calculator provided by Credit Builder Loan Provider Self to get a better idea. If you pay their minimum commitment of $25 per month you will pay a total of $600 over the course of 24 months, but you will only receive $520 after your final payment gets made. 

What are the pros and cons? 

Because you can see such a high boost in a short period of time, you can qualify for better rates to refinance other loans that you might have like your car payment which means the cost of this loan can pay for itself in a very short period of time. Another plus is that you don’t need to pay anything upfront, like a secured credit card. 

It all sounds great, but here are some drawbacks. Although they are easy to qualify for, approvals are typically based on income. You will also have to pay interest for someone to hang onto your own money for you. So make you weigh your pros and cons. You shouldn’t look at this as a way to make yourself save money if you have trouble doing that, you should only consider this type of loan if you cannot qualify for anything else or if you need a credit boost in a short period of time without any upfront money.  

6. Lending Circles: 

How many points can I improve? 

Mission Asset Fund’s average participant had an increased credit score of 168 points.

What are Lending Circles? 

Here’s how Lending Circles work – you sign up and apply for the loan, if you get approved you will join a small group of people (about 6-12 people) who need a similar amount of money as you. Each person in the circle is obligated to contribute a small amount of money each month. The monthly payment from each member funds a loan which then gets distributed to one individual who then starts the process of paying it back,  as the loans get paid back, not only are the payments reported to the credit bureaus as an installment loan, which can boost your credit score quite a bit, the payments go back to the members in the group, so everyone gets to recoup their investment. 

The process then repeats the next month for the next person in line until all members of the group have received their loan. By the time the last person receives their loan, the first person should be completely paid up and by the time the last person has paid off their loan every member in the group should have received their investment back. Companies such as the nonprofit Mission Asset Fund, help participants form lending circles and build their credit scores.

What are the pros and cons? 

A great perk aside from it being a cool community building concept, the loans are typically low interest or interest-free. Many people struggle with building up personal savings accounts at all, let alone putting aside enough money to afford life’s bigger expenses. Participating in a savings cohort gives you the power to afford large purchases in exchange for supporting the purchases of the people in your savings circle. You might have to pay interest depending on the type of account you choose to open and the service facilitating your savings cohort. It’s standard for the first recipient to be charged a higher interest rate than the final recipient of the money pot. This evens the playing field by incentivizing the last participant to contribute to the pot longer than the rest of their group.

7. International Banks offer services to report payments to the US Credit Bureaus: 

How many points can I improve? 

Since your credit history will be transferred to American Credit, your credit score will reflect your “creditworthiness” based on the system the country you are coming from uses. 

What services do International Banks Offer? 

This option only applies if you came to the United States from another country. Normally, the credit you build up from another country doesn’t count towards your credit when you arrive in the United States. However, many international banks with a presence in the United States offer their members services that will report your payments to the United States credit bureaus to help establish your credit. This will be the only exception to the “building your credit with NO credit cards”, however here’s a bonus perk; for any new arrivals to the country, you actually have a few other options. Other companies like Nova Credit Union, will translate your credit history from your country into a credit score in this country. This can help you qualify for an American credit card. Another option is the Jasper credit card, they use alternative data to help you qualify for credit. If you’re a new arrival to the United States with a job offer, this alternative data can be good enough to qualify for a Jasper card. 

What are the pros and cons? 

Nova Credit has built technology to translate credit data from countries like Australia, Canada, India, Mexico, the UK, and more into a U.S.-equivalent score that newcomers can share with U.S. companies when they apply for credit products here. This means that newcomers to the U.S. can now apply for credit cards, apartments, loans, and other credit products by using their international credit history. Once you use your international credit history to get a credit card or other credit product here, you can start to build a U.S. score.

Avoid Payday Loans

DO NOT USE A PAYDAY LOAN!  Payday loans often come with high finance charges — and if you’re unable to pay the loan back on time, you will be charged even more, and the loan could potentially go into default and damage your credit score. Our advice is to avoid them at all costs! Another con for using a payday loan is that payments are usually not reported to the credit bureaus. However, if you’re late, oftentimes because you can’t pay back the extremely high-interest rate, then you will go to collections and that will be reported on your credit report. They are just a bad idea all around and we have so many other financial products out there that are much better alternatives.