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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.

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.

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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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TPG featured card

Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review
Apply for American Express® Gold Card
at American Express's secure site

Rewards

3 - 4X points
4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.

Intro offer

60,000 bonus points
Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

Annual Fee

$250

Recommended Credit

670-850
Excellent/Good
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.

Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees
Apply for American Express® Gold Card
at American Express's secure site
Terms & restrictions apply. See rates & fees
Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • Intro Offer
    Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

    60,000 bonus points
  • Annual Fee

    $250
  • 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

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees