Can You Build Credit without a Credit Card?

Not everyone wants a credit card. Some of us just don't manage credit well, and that's okay, as long as we know it, and avoid it. Though using credit cards responsibly is one way to build credit, it's not the only way.

Put a credit card in your wallet and you're suddenly buying drinks for the whole bar, a new wardrobe every month, and just basically spending money like it's going out of style. So you did the responsible thing and got rid of all of them. But how do you build a good credit score now? 

Be an authorized user on a parent's or spouse's card

Having financially stable people in your life can be pretty awesome. Especially if they're willing to add you as an authorized user on their account. If your loved one is making payments in full and on time, it'll show up on your credit report--and help improve your score. Protip: Only add your name to the account if your loved one has good financial habits--otherwise you're right back where you started. Your parent or spouse is still responsible for the bill--so cut up, lock up, or otherwise keep your credit card out of your reach. If having your own credit card feels like having unlimited money, using someone else's is going to be even worse--especially since you're not the one paying the bills. 

Get a credit builder loan

This is another great reason to join a credit union if you're eligible. If you're a member of a credit union, you're probably eligible for a credit builder loan. Here's how it works. Instead of getting the money upfront, you either deposit a lump sum or make payments over time. Your bank puts that money in an interest-bearing savings account as collateral. Once you have the full loan amount (or immediately if you make a lump sum) you can use that money as your line of credit. You'll still get charged interest on the money you borrow--and it'll be higher than the interest you earn in the savings account--but it's a great way to get practice borrowing money. Your bank will report your payments to the three major credit bureaus, so be sure you're repaying on time and in full! 

Pay your student loans

All you needed for your federal student loans was to fill out a FAFSA. We can all agree that student loans are the worst. But they can actually help you build credit.  

Ask companies to report on your behalf

There are services (like Clear Now, RentTrack, and Pay Your Rent) your landlord or utility company can use to report your payments to one or more of the three major credit bureaus. Ask if that's an option for you. If not, Experian lays out the benefits to landlords and property management companies. Give your property manager the information and encourage her to choose a service! 

For Landlords → Benefits of Reporting Your Tenants' Rental Payments to Experian RentBureau

Pay any lingering credit card bills

If you tried the credit card route and still have bills to pay off, make sure you do it on time and in full every month. 

Building credit without a credit card can be done! And it's definitely the right path if you don't manage credit well since negative remarks and late payments can really ding your credit score. Know yourself, and know your limits (Ha. See what I did there?), and you'll be well on your way to building stellar credit!