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How to Build Credit Without a Credit Card

In this article

  1. Become an authorized user
  2. Consider a loan to help build credit
  3. Does paying bills build credit?
  4. Build credit instantly with Chime Credit Builder
  5. FAQs
  6. Final thoughts

Credit cards aren’t the only way to build credit. Read on to learn some alternative ways to build and improve your credit.

Katana Dumont • October 21, 2022

Credit cards are great for many things; you can rack up rewards points, get cash back, and even earn frequent-flyer miles. But one of the most fundamental reasons to own a credit card is to help build your credit history and improve your credit score

Despite credit cards being the most common way to build and improve credit, not everyone can qualify for a standard credit card. If your credit score is too low to qualify for a credit card, don’t panic. There are alternative ways to build credit, without ever needing to own a credit card. 

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Become an authorized user

Although this method does involve a credit card, you do not need one in order to reap the benefits. Without having to apply for a credit card of your own, you can request to become an authorized user on another person’s card. As an authorized user, you can use the primary cardholder’s credit card and piggyback off their credit card activity. Even if you never use the card, the card activity can still be used to positively impact your credit. 

It’s important that the primary account holder is responsible and has on-time payments and low credit utilization. Keep in mind that any negative account information can damage your credit standing as well. Only become an authorized user if you and the account holder are on the same page and are both committed to practicing healthy financial habits. 


Consider a loan to help build credit

The reason credit cards are the go-to method for building credit is that credit card companies report all credit activity to the major credit bureaus — Experian, TransUnion, and Equifax — which, in turn, evaluate your creditworthiness and eligibility. But this approach isn’t exclusive to credit cards. In fact, most types of loans also report account information to the major credit bureaus, allowing you to build credit when you take out a loan. 

Credit-Builder Loans

As the name suggests, credit-builder loans exist for the sole purpose of helping you build your credit. The amount you borrow is typically held by the lender in a bank account while you make payments. You won’t have access to the money until you have fully repaid the loan. At that time, you can access the funds, including any interest earned from the savings account. While you’re making on-time payments, your credit is building naturally. These loans are most often offered by credit unions or community banks.


  • Low-interest rates
  • Accessible to those with poor or nonexistent credit
  • Low debt burden


  • Don’t have access to the money right away — need to pay off the loan before you can use the funds

Auto Loans

Auto loans can help increase your credit score when you make on-time payments. Most traditional auto loan dealers report all your payments to the credit bureaus. If you make your loan payments on time, you might be able to positively impact your score. Keep in mind that you will already need some type of credit history in order to qualify for an auto loan. Your credit score can tell you how likely you are to get a car loan and what interest rates you’ll pay.


  • Increases your credit history — provided you don’t have any late or missed payments, this increase can help build your score


  • A hard inquiry will be made to your credit report, which could temporarily lower your credit score by a few points
  • Higher interest rates
  • Less accessible to those with poor or nonexistent credit

Federal Student Loans

Consistent and on-time payments toward federal student loans can improve your credit score. Most federal student loans don’t require any credit history, so they’re a great option if you are just starting your credit journey. You shouldn’t take on student debt just to build your credit, but if you’re already considering a student loan, it could be a good way to begin building a solid credit history. Payments toward your federal student loans are reported to the 3 credit bureaus, and if they’re paid on time, they can help build and improve your credit rating.


  • Accessible to those with poor or nonexistent credit
  • Lower interest rates than private student loans


  • Missed or late payments on federal student loans could negatively affect your credit score
  • High debt burden

Mortgage Loans

Similar to auto loans, mortgage loans are more geared toward those with a preexisting credit history. If your only objective is to start building credit, a mortgage loan may not be the best place to start. However, if you are ready to become a homeowner, then a mortgage loan is a great way to build a positive payment history. Mortgages typically take 15 to 30 years to pay off, which is plenty of time to perfect your score by making on-time payments.


  • Can positively contribute to the age of your credit, if payments are made on time 


  • Less accessible to those with poor or nonexistent credit
  • High debt burden
  • A hard inquiry will be made to your credit report, which could temporarily lower your credit score by a few points


Personal Loans

Personal loans can also help build credit, as long as you make payments on time and pay back the loan as soon as possible. Some lenders offer unsecured personal loans to individuals with no or bad credit. Keep in mind that if you don’t have an established credit history, you will likely be charged a higher interest rate. Not all personal lenders report to the major credit bureaus, so if your main motivation is to build credit, make sure to ask the lender if your payment history will be reported. 


  • Accessible to those with poor or nonexistent credit


  • Potential for high interest rates
  • Must be repaid in equal monthly installments — if you can’t make the payments, your credit score will suffer
  • A hard inquiry will be made to your credit report, which could temporarily lower your credit score by a few points

Does paying bills build credit?

In addition to loans, some rent and utility companies also report your payment history to the major credit bureaus. Paying your bills on time can build credit and positively impact your score. Consider the following:

  • Rent payments: While most landlords or property managers don’t report your monthly rent payment to credit agencies, credit bureaus will incorporate timely rent payments into your credit report if that information is submitted to them. It’s worth asking your landlord if they will report your rent payments. There are also some third-party rent reporting services that can help facilitate the transfer of information to your credit report if your landlord doesn’t offer it.
  • Phone bills: If you have a phone plan in your name, your payment history may be reported to the major credit agencies, depending on your contract and the phone company you use. If your phone company doesn’t report your payment activity, then paying your cell phone bill won’t have any automatic impact on your credit score. But keep in mind that missing payments or making late payments can cause your credit score to drop if your cell phone account becomes delinquent.
  • Utility bills: The same goes for utility bills. Ask your utility provider if they report your payment history to the 3 credit bureaus. If so, a pattern of on-time payments can help boost your credit score.

Build credit instantly with Chime Credit Builder

If you have poor credit or no credit, and are struggling to get approved for a traditional credit card, then you are in luck. The Chime Credit Builder Visa® Credit Card¹ might just be the solution you are looking for. There is no credit check, no security deposit, no interest, and no annual fees. 

At the end of each month, the Credit Builder card reports your monthly balance from the money in your Chime Checking Account to the major credit bureaus¹. This way, your everyday purchases like gas, groceries, bills, and subscriptions can count towards your credit history. Consistent use can build your payment history and balance out your credit diversity. Using Credit Builder is an easy and effective way to build your credit². 


How fast will a car loan raise my credit score?

How soon a car loan will raise your credit score depends on many factors such as payment history, amounts owed, length of credit history, etc. Although making on-time monthly payments on a car loan will eventually lead to an improved credit score, this can take a while to develop. Also, keep in mind that applying for an auto loan could actually ding your score temporarily, because a hard inquiry will be made to your credit report. A car loan can be a good way to build your credit score over the life of the loan, but it’s more of a long-term credit building strategy.

What bills help build credit?

Traditional credit building is mostly based on your history of borrowing money through credit cards and loans, but in some cases, non-credit based payments like utility bills, cable bills, phone bills, and rent payments, can also affect your credit score. If your landlord or utility provider reports your credit activity to the 3 major credit bureaus, then you can use your on-time bill payments to help build your credit score. If not, you also have the option of using third-party bill reporting services to relay your payment history to credit agencies. 

Do payday loans build credit?

Payday loans will most likely not help you build or improve your credit. Because payday lenders usually don’t report your payment history to the 3 major credit bureaus, they are unlikely to impact your credit score. On top of that, payday loans are notoriously expensive for consumers. If you need to borrow money consider some payday loan alternatives.  

Does a phone bill build credit?

Most phone companies do not report your payments to the credit bureaus, which means that your payment history — even a consistently good one — will not help your credit score. But keep in mind that missing payments or making late payments can cause your credit score to drop if your cell phone account becomes delinquent.

Final thoughts

If you don’t qualify for a credit card or simply prefer not to have one, it’s important to understand how to build credit without one. Keep the following in mind when doing so.

  • Make payments on time: First and foremost, always make consistent on-time payments. Late payments will severely damage your credit score.
  • Diversify your credit: The more credit diversity, the better. Utilizing a mix of credit building methods — credit cards, loans, bills — will help you in the long run to building your credit history and eligibility.
  • Manage your debt-to-income (DTI) ratio: Your DTI compares your monthly debt payments with your income. To keep your DTI low, focus on reducing your debt or increasing your income. This will keep your debt at a manageable level and increase your chances of being approved by banks and other lenders.
  • Maximize your credit history: If you have no credit history at all, you’ll have to start somewhere. Future lenders like to see that you’ve had a history of making on-time payments. 

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

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‡ SpotMe® for Credit Builder is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

1 To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime® Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

2 On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

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