Effective Ways to Build Credit Without a Credit Card

Effective Ways to Build Credit Without a Credit Card

Are you working to establish or build your credit score? If so, getting one, or more, credit cards is a good first step. However, something you may learn the hard way is that not everyone is going to qualify for this card, or you may feel uncomfortable using it.

If you are in the above situation, you’ll be happy to learn there are several ways you can begin to build your credit without having a credit card. Keep reading to learn what these methods are.

Get Different Credit Types

It’s always a good idea to have different types of credit on your credit report. This includes a variety of things, such as auto loans, mortgages, student loans, etc. While this is true, it doesn’t mean you need to take out too many lines of new credit at the same time.


Because, each time you request credit from any lender they are going to make a hard credit inquiry. Each time this is done, your credit report takes a hit, reducing the score by a few points.

Take Out a Credit Building Loan

If you are trying to establish your credit or want to repair credit that is in the poor range, choosing a credit-building loan could be a smart move. You’ll find several lenders that offer these services, and sometimes, a small community bank or credit union will provide these. Keep in mind though, larger chains and national banks don’t typically offer this type of product.

Generally, it is hard to borrow money from any lender if you have a score that’s 600 or below. However, since credit building loans are designed to help you increase your credit rating, this rule may not apply with some lenders. Once you have received this loan, and you pay it on time over a period of 12-months, you may be able to increase your score by up to 100 points.

It’s important to note, the credit builder loan you receive is very different than a more traditional loan. Rather than getting the money and then repaying it, the amount that you borrow is put in a certificate of deposit account after you have paid the initial fee. During the year (which is the typical period for these loans) you will make payments each month that include the interest rate of 10 to 15 percent, as well as a portion of the principle.

At the end of the loan’s term, you will have established a good payment history that will improve your credit score. You are also going to get the money that you initially borrowed (free and clear) and unlock the CD.

Rebuild Your Credit with These Credit Card Alternatives

If you are searching for an effective and proven way to improve your credit score without the use of credit cards, keep the information found here in mind. With these tips you can begin building your credit history and your credit worthiness.

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