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Can You Build Credit Without Credit Cards?


Having a robust credit score has multiple benefits, beyond just being approved for credit with low interest rates. While the types of credit available that benefit from a healthy score are vast (from mortgages, personal loans, credit cards to car loans and beyond), your credit ultimately functions as a snapshot of who you are financially. It is a view into how you handle financial situations, how quickly you repay debts and how you go about repaying those debts. Therefore, it shouldn’t be much of a surprise that your credit report can be used by potential renters and employers as well.

However, when faced with trying to bolster credit, many people overlook more conservative ways to build in favor of using credit cards.

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Director of client relations at Quizzle, Katie Bushor, explained, “Credit cards may be the quickest way to pad a report, but card usage is not always the best choice for everyone. Whether you have a history of mishandling credit cards, have recently filed bankruptcy or dislike the idea of juggling revolving credit, credit cards might not be the option for you.”

Although they are often touted as the quickest and easiest, there are other ways to make your credit report shine. Below are just five of those frequently downplayed ways.

Step Aside, Plastic

Credit-Builder Loans: Made available by credit unions and banks, credit-builder loans are just that: loans offered to customers for the sole purpose of helping build credit. These loans are frequently less than $1,000 with a lifespan of a year or two.
Peer-to-Peer Loans: P2P loans, or alternative loans, are available through sites like Prosper and Lending Club. Unlike other lenders, p2p lenders cut out the banking institute and provide lenders the ability to bolster their own returns by lending unsecured funds.
CD Loans Or Passbooks: These loans utilize your current balance in a CD or savings account to back the amount loaned. Because the lender is securing and holding the loan funds with your own money, which could be used to repay the loan upon no payment, being approved for this type of loan is fairly easy for individuals who have low or no credit.

Each of the above methods are ways to bolster your credit through borrowing, without relying on a credit card.

Have you fallen victim to these credit card blunders?

The following tips are suggestions that have a big bang for your buck, and involve even less risk on your behalf to make your score shine brighter.

Become An Authorized User: By becoming an authorized user on someone else’s credit card, you can benefit from their credit usage, even without ever holding the card. The crux of this method boils down to the holder, however. Assuming the credit holder pays regularly, on time, above the minimum and within a reasonable usage percent, their credit usage can help boost your score just by having you on the account as an authorized user.
Rent, Utilities And Car Payments: While not a surefire way (some property managers do not report to credit bureaus), paying on time every time on your other bills can help build your credit.

It is ultimately your responsibility to make sure your credit report properly reflects who you are financially. You can get by without actively managing your credit, or you can saddle up and embrace the opportunity to present yourself in the best light possible. Take control over your financial portrait and don’t be a bystander to your money habits. The first step to financial liberty is taking responsibility.  


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