Building Credit Without a Credit Card

Many people do not realize that it is possible to begin building their credit without having a credit card. In fact, it is easier than you may think!

You Can Use Your Student Loans

This is one of the first and best ways that you can start working on building your credit. Regardless of the type of loan you take out whether private or federal, your responsibility for the debt can help you! The repayment terms of the loan are dictated by the loan you have so you may begin making payments after school is done with a federal loan or you may start making payments sooner with a private loan. When you make your loan payments on time, every month, you will begin building your credit without actually having a credit card.

You Can Use Different Types of Loans

There are many loans that can help you build credit without a credit card. However, there are even loans that are specifically designed to help you build credit. These are called credit builder loans and are very similar to a secured line of credit. If approved for the loan, your funds from the loan will be placed into a savings account until you repay the loan. Once you pay the loan off, the money in the savings account is yours to keep! Your repayments on that loan are inputted into your credit report, and this history of payments can improve your score. However, they will only improve your score if you are responsible with your repayments. Late payments, and defaults can hurt your score as well.

Another type of loan that you can pursue is a car loan or a mortgage. Both of these loans report to credit reporting agencies, and proper repayment on these loans can improve your credit. However, it will be difficult to get approved for either of these loans without an established credit history. If that is the case, you may want to look at alternative signing options like having a co-signor with a good established score with you.

Beware of Scams

Scammers like to take advantage of people in need. When people are desperate to improve their score without a credit card, then they view those people as easy targets. Some scams that you may come across include different types of loans like an advance-fee loan. This is a type of loan that usually guarantees approval because they ask the borrowers for an upfront payment before providing the loan. This is not a legitimate loan setup, and real lenders will not do this!

Another loan scam you may come across is a payday loan. These loan repayments are not reported to the credit reporting agencies (even if the scammer tells you they are.) In fact, these loans can hurt you if they end up defaulting and getting sent to collections. They will never help you.


While having a credit card is a quick and easy way to build credit, it is not the only way. You can build and improve your credit score with may different methods. However, it is important to be cautious of scams.