Explore the Best Ways to Build Credit without a Credit Card

Explore the Best Ways to Build Credit without a Credit Card

Building credit without credit Card: A credit card is a blessing in disguise if used wisely. However, there are still many people who behold a fear of having a credit card and the excessive debts they are imposed to pay for purchases that are at times not required and sometimes even worthless. To avoid unnecessary expenses, many people avoid having a credit card and instead prefer going for a debit card.

In such a scenario, how to build your credit score? If having a credit card is the easiest way to build a credit score, then what about those who do not own it? Can you never have a good credit score without a credit card? These questions and worries often create turbulence in mind with a thought of having a poor rating. Having a good credit history is most important because in need of an urgent loan if required a home loan or any such loan in case of an emergency requires to have a good credit score. There is a way out!

Before you get to learn the alternatives, it is important to understand the factors that influence your credit score. All factors are interconnected but make a unique impact on your credit score. These contributing factors are:

  • Types of credit used including credit cards, mortgages, installment loan, and personal loans have a minimum contribution of 10%.
  • New Credit Card also comprises a 10% contribution to the credit score.
  • Payment History marks a maximum contribution of 35% keeping in record how regular you are with your credit payments and how many times you miss making a payment.
  • Any owed amount contributes 30% reflects the total amount you owe to all your existing accounts comprising of loans, credit cards or any similar debts.
  • Length of credit history has a contribution of 15% with a record of how long your account has been active.

Now, after you have gained valuable insights into the influencing factors, it is clear that credit cards mark only a 10% of contribution and even without having it; you can build your credit score.

Here are the ways that help you build credit without a credit card:

  1. The first initiative is to apply for a secured credit card. For attaining this type of card, you make an upfront payment, and the deposited amount is the actual amount of credit you have with you. You can use the card in wherever you wish to just like a regular credit card and in case you fail to make any payment then the credit card issuer uses your deposited amount as collateral. Also, make sure that the card providers share all the payment data with the three Credit Bureaus of U.S., Experian, TransUnion, and Equifax.
  1. The second initiative you can take to ensure a good credit history is to pay your rent on time. If in case, your property owner is associated with the Experian Rent Bureau then there is least to worry about late payments because this bureau shares the rental payment data with only one credit bureau. However, if associated with other rental tradelines then make sure to pay timely rental because these rental associations share your reports with the all the credit bureaus.
  1. If you have a student loan, ensure to make the payment timely. Even when in college you can start to repay your student loan and continue paying on time each month as long as it gets over. This helps you build your credit score.
  1. Then you can opt for using a credit builder loan that works for the sole purpose of building credit. Once this type of loan is approved, the loan amount is transferred to your saving account or CD and stays there until you have repaid the loan. After repaying, the entire amount in your saving belongs to you.


  1. You also need to keep track of your mortgage or car loan and the timely payment you are making every month towards the repayment of the loan. Both the mortgage and car loan are integral aspects of credit bureaus and hence put a significant contribution in building a good credit score. However, it will be a challenge to get these loans with a good credit history, but a steady income or a reasonable down payment can help you get this loan. You can even take help of a co-signer who takes the loan on your behalf, and you become the authorized user of the loan amount. However, the co-signer would be responsible for any default or late payment so many sure someone helped you is not out into trouble.