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How to build credit without a credit card

Feb. 08, 2020
5 min read
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We here at TPG talk a lot about credit cards. From the best credit cards for college students to top travel rewards credit cards, it's safe to say we're a little bit obsessed. But what if you don't already have credit? Some of the best opportunities available for points and miles reside in premium cards that require a hefty credit score and a relatively thick credit report to qualify. If you're just starting out and have no idea what to do, worry not, there are other ways for you to build your credit without a credit card.

Become an authorized user

Adding your children as authorized users to your credit cards will help them build a credit history and will (hopefully) lead to better credit scores as they transition to adulthood. (Photo by Maskot / Getty Images)
Adding your children as authorized users to your credit cards will help them build a credit history and will (hopefully) lead to better credit scores as they transition to adulthood. (Photo by Maskot / Getty Images)

This is cheating a little bit here — after all, the title of the article specifically excludes credit cards — but in this case the credit card isn't yours. If someone in your family already has a credit card, they can often add you as an authorized user for no additional fee. While some card issuers, like American Express, require a minimum age to hold a card (13 years), others will allow cardholders of any age. There's no need for you to use the card, either. Simply having your name on there and ensuring that the primary accountholder is making payments means your credit will improve too. This can be especially helpful for young adults who otherwise wouldn't have credit history.

Even better, if the credit card on which you become an authorized user has some travel perks, you can take advantage too. One of the best perks available to authorized users of credit cards is access to Priority Pass lounges in airports across the world.

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Get a loan

Photo by Kathrin Ziegler/Getty Images
Photo by Kathrin Ziegler/Getty Images

This is a more common approach for those with a thin credit history. No matter what kind of credit you've got, there are options for you to acquire a loan to help build up your report. If you have someone you trust (and who trusts you), you can opt to have a co-signer in order to bring your interest rate down.

If you're not in a position to have a co-signer, you can still be approved for a loan, though you may be at the mercy of the bank in terms of interest rates. My own first loan was for a car and I was stuck with a murderous 12% rate. I sucked it up, paid it for a year, and refinanced when my credit history improved enough to net me a lower rate. While this wasn't ideal, it did get me a jump-start and allow me to build my credit quickly.

If you aren't in need of actual money and are just looking to build your credit, you can also look into a credit builder loan. Specifically built for those wanting to improve their credit, these loans are generally available at credit unions, banks and online lenders. Once approved, the loan amount is held by the lender in an interest-bearing savings account. No money is actually withdrawn until the loan itself is paid off (often within a one to two-year time frame), at which point all the money paid and interest accrued is becomes available. It's an easy, low-risk way to build history without a ton of effort.

Report your other payments

While this isn't a foolproof method, it can be valuable to those who are able to take advantage. There are a few different services out there that offer the ability to report other payments — like rent, cellphone bills and utilities — to credit card bureaus in order to establish payment history.

Last year, Experian launched Experian Boost, a free service that allows you to add bills paid to your report. While there's no guarantee your score will jump, if your credit report is looking a little empty this'll probably help. On the downside, this only works for Experian credit reports, not TransUnion or Equifax.

It's also possible to ask your landlord to report your rent to the different credit bureaus, though it may not be feasible for them to do so. In that case, there are a number of companies that you can sign up for in order to have your rent reported. Experian's website lists several it works with. While Equifax and TransUnion don't have a single page that list all available providers, you can still search online to find which businesses report to which bureaus.

Bottom line

It can be overwhelming trying to figure out the best way to build your credit, especially when obtaining a credit card is off the table. While there's no single solution for everyone, there are a number of different methods for you to try — from score boosting services to credit builder loans — so that you can improve your credit history.

Feature photo by skeeze/Pixabay.

Featured image by Photo by skeeze/Pixabay

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  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
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Best Marriott card for Business Owners
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
3 / 5
Go to review

Rewards Rate

6X6x points at hotels participating in the Marriott Bonvoy® program.
4X4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
2X2x points on all other eligible purchases.
  • Intro Offer
    Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.

    Earn 100,000 points
    75,000 points
  • Annual Fee

    $125
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.

Pros

  • 6x points on eligible purchases at hotels participating in the Marriott Bonvoy program
  • 4x points at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
  • 2x points on all other eligible purchases
  • Earn a free-night award each card renewal month (up to 35,000 points)
  • Receive 15 elite night credits to jump-start status
  • Transfer Marriott points to 40+ airlines

Cons

  • Airline points transfer ratios are poor
  • Must spend $60,000 in a year for second free-night award
  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
  • 2x points on all other eligible purchases.
  • Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
  • Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
  • Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
  • Terms apply.
  • See Rates & Fees