Building Credit Without a Credit Card: Alternative Methods (2025)

For many, building credit is synonymous with using a credit card. After all, it is often touted as the easiest and most common way to build a credit score. But what if you don’t want or need one? What if you’ve heard about the dangers of credit cards—high interest rates, debt spirals, and missed payments—and you’d prefer to explore alternative methods to build your credit?

The good news is that you don’t need a credit card to establish or improve your credit score. There are several other ways to demonstrate your creditworthiness and build a strong credit history without the risk of overspending or accumulating high-interest debt.

In this blog, we’ll explore alternative methods to build credit without relying on a credit card. From becoming an authorized user on someone else’s account to using credit-builder loans and rent payments, we’ll provide actionable strategies to help you take control of your financial future. And, we’ll show you how Beem’s platform can help you track your progress, manage your debt, and explore financial products that can aid in your credit-building journey.

Why Building Credit Without a Credit Card is Possible and Beneficial

First, it’s essential to understand why building credit without a card is possible and beneficial. Credit scores are determined by more than just credit card usage. Your score is based on several factors, including:

Payment history (35%): Whether or not you pay your bills on time.
Credit utilization (30%): The amount of your available credit that you use.
Length of credit history (15%): How long you’ve been using credit.
Types of credit (10%): The diversity of credit accounts, including loans, credit cards, and mortgages.
New credit (10%): The number of recent credit inquiries.

While credit cards play a significant role in building credit, they are far from the only option. You can increase your credit score over time by demonstrating responsible management of other types of credit or financial behaviors. Plus, avoiding the risks of credit cards, like high-interest rates and the temptation to overspend, can help you stay financially responsible.

1. Becoming an Authorized User on Someone Else’s Credit Account

One of the easiest ways to build credit without a credit card is by becoming an authorized user on someone else’s existing credit account. This is a powerful way to gain credit history, especially if the primary account holder has a strong credit score and maintains a positive payment history.

How It Works:

As an authorized user, you are added to the account but are not responsible for making payments. The account’s activity will appear on your credit report, and you’ll benefit from the primary account holder’s good credit practices, such as on-time payments and low credit utilization.

Challenge:

You don’t have control over the account, and any late payments or harmful activity will also affect your credit score. Therefore, the primary account holder must be someone you trust and have a good credit history.

Solution:

Ensure that the person you’re added to as an authorized user has a positive payment history and doesn’t carry high balances on their credit cards. This method primarily benefits young adults, college students, or those just starting their credit journey.

2. Using Credit-Builder Loans

A credit-builder loan is a loan specifically designed to help individuals build credit. These loans work by depositing the borrowed amount into a savings account, which you repay in monthly installments. Once the loan is paid off, the amount is released to you, and the positive payment history is reported to the credit bureaus.

How It Works:

Apply for a credit-builder loan at a bank, credit union, or online lender.
Monthly payments: Make regular payments over the loan term.
Once the loan is repaid, you receive the amount minus any fees or interest charges.
Your credit score improves as you demonstrate responsible repayment.

Challenge:

The process requires upfront payments, and you may be charged interest or fees, though they are generally lower than what you would pay with credit cards. The loan may also be small and designed for those with limited or no credit history.

Solution:

Credit-builder loans are ideal for those who want to build credit without the risk of credit card debt. Look for credit unions or online platforms that offer low-interest rates and flexible repayment terms. Beem’s marketplace can help you compare loan options to find the best credit-builder loans.

3. Reporting Rent Payments to Credit Bureaus

Did you know that your rent payments can help you build credit? If you’re paying rent every month, you may be able to have those payments reported to the credit bureaus, which can help improve your credit score. Many rent payment services now offer credit reporting as part of their service.

How It Works:

Rent payment services like RentTrack, RentReporters, or Experian RentBureau will report your monthly rent payments to the credit bureaus, effectively allowing you to build a credit history without taking on debt.

Challenge:

Many renters may not realize that their rent payments can be used to build credit, and it’s not always available through traditional reporting channels.

Solution:

To take advantage of this, you can sign up for one of the above rent reporting services. Some services are free, while others charge a small fee. Beem also helps you track your credit score and monitor improvements as you add rent payments to your credit history.

4. Secured Credit Cards

A secured credit card is another great way to build credit without taking on the risks associated with traditional cards. Unlike regular cards, secured cards require a cash deposit as collateral. The deposit amount typically becomes your credit limit.

How It Works:

You provide a deposit (e.g., $200) to the bank or issuer.
You’re given a credit card with a limit equal to that deposit.
Use the credit card for small purchases and pay it off regularly to build your credit.
The bank reports your payments to the credit bureaus, allowing you to build a credit history over time.

Challenge:

The challenge with secured credit cards is that you must make an upfront deposit, which can be restrictive if you’re on a tight budget.

Solution:

Start with a small deposit you’re comfortable with and ensure you pay off the balance in full each month. This will help you build credit without incurring debt. Many secured cards have low fees and interest rates, making them an excellent option for credit-building.

Read related blog: How to Rebuild Credit After Bankruptcy?

5. Using a Personal Loan to Build Credit

While it’s not a traditional method for building credit, taking out a small personal loan and paying it off regularly can help improve your credit score. The key here is using the loan for responsible purposes, such as consolidating existing debt or making essential purchases.

How It Works:

Apply for a small personal loan from a lender that reports to the credit bureaus.
Use the loan for a specific purpose (e.g., debt consolidation).
Make consistent, on-time payments over the term of the loan.
The positive payment history is reported to the credit bureaus as you repay the loan, boosting your credit score.

Challenge:

Personal loans typically require a solid credit history or income verification, making them harder to secure for those without credit.

Solution:

If you can secure a personal loan with favorable terms, use it responsibly to avoid taking on additional debt. Beem’s personal loan marketplace can help you compare loan offers and find the best deals based on your financial situation.

6. Becoming an Authorized User on an Existing Account

If you’re starting to build credit, one of the quickest ways is to become an authorized user on someone else’s credit account. This could be a parent, relative, or trusted friend with a good credit history.

How It Works:

The primary account holder adds you as an authorized user on their existing credit card account. While you aren’t responsible for making payments, their account history—such as on-time payments and credit utilization—will appear on your credit report.

Challenge:

You don’t have control over the account, and if the primary account holder misses a payment, it will negatively affect your credit score.

Solution:

Only ask to be added to someone’s account if they have a positive payment history and manage their credit responsibly. Ensuring they are comfortable with the arrangement is important, as their credit management will directly affect your score.

Table: Comparing Methods for Building Credit Without a Credit Card

Method	Description	Pros	Cons	Best For
Authorized User	Added to someone else’s credit account	Easy and quick way to build credit	No control, risks if primary account holder fails	Those with trusted family/friends with good credit
Credit-Builder Loan	A small loan designed to help build credit	Helps establish credit history, fixed payments	Small loan amount, interest fees apply	Those with limited or no credit history
Rent Payments Reporting	Use rent payment services to report your payments	Builds credit without taking on new debt	Requires rent reporting service	Renters who want to build credit with no loan
Secured Credit Card	Prepaid credit card used to build credit	Helps establish credit with low risk	Requires deposit, fees may apply	Those new to credit who need to build credit
Personal Loan	Use a personal loan for a responsible purpose	Builds credit with a fixed repayment schedule	Requires approval, must be used responsibly	Those looking for small loans to consolidate debt
Authorized User on Account	Being added as an authorized user on an existing credit account	Quick way to build credit without borrowing money	Depends on another person’s credit behavior	Young adults or beginners building credit

FAQs on Building Credit Without a Credit Card

Can I build credit without a credit card?

Yes, there are several ways to build credit without using a card, including becoming an authorized user, using credit-builder loans, reporting rent payments, and using secured ones.

How long does it take to build credit without a credit card?

It typically takes 3 to 6 months of responsible credit behavior (e.g., timely payments and low credit utilization) to improve your credit score.

Can my rent payments improve my credit score?

Yes, rent payment reporting services can report on-time rent payments to the credit bureaus, which can help improve your credit score.

How does a credit-builder loan work?

A credit-builder loan involves borrowing a small amount of money and making regular payments. The lender reports your payment history to the credit bureaus, helping you build a credit history over time.

Is using a personal loan a good way to build credit?

If used responsibly, a personal loan can help improve your credit score by demonstrating your ability to repay debt consistently. Just ensure you don’t take on more debt than you can handle.