Can You Have a Credit Score Without a Credit Card?

When building your credit, many people assume that having a credit card is the only way to establish a solid credit history. After all, credit cards are one of the most common ways to demonstrate that you can manage debt responsibly. But what if you don’t want a credit card or can’t get approved for one? Does that mean you’re shut out from building a credit score?

The good news is that you can build a credit score without a credit card! There are multiple ways to establish and improve your credit even without a credit card, and this blog will help you understand how. By the end of this guide, you’ll know exactly how to start building your credit, what alternatives are available, and the steps you can take to protect your credit health.

How Credit Scores Are Calculated

Before diving into the ways you can build credit without a credit card, it’s essential to understand how credit scores are calculated. Credit scores are typically based on FICO® Scores or VantageScore, and they are used to measure your creditworthiness — or how likely you are to repay debt on time.

The FICO® Score, the most widely used scoring model, ranges from 300 to 850. The higher your score, the more likely you are to be approved for credit, whether for a credit card, car loan, mortgage, or personal loan.

Here’s a breakdown of the factors that go into calculating your credit score:

1. Payment History (35%)

Your payment history is the most significant factor in determining your credit score. It accounts for 35% of your overall score. This includes whether you pay your bills on time, if you’ve missed any payments, and how recently any missed payments occurred. Credit cards, loans, and even utility bills can impact this section of your score.

2. Credit Utilization (30%)

Credit utilization refers to how much of your available credit you’re using. For example, if you have a $10,000 credit limit and owe $3,000, your credit utilization is 30%. Keeping your credit utilization below 30% is a good rule of thumb for maintaining a healthy score.

3. Length of Credit History (15%)

The length of your credit history refers to how long your credit accounts have been open. The longer your accounts have been active and the more you’ve demonstrated responsible management, the better it looks on your credit score.

Read related blog: Building Credit Without a Credit Card: Alternative Methods

4. Credit Mix (10%)

Various credit types — such as credit cards, installment loans, mortgages, and student loans — can positively impact your credit score. A diverse mix shows lenders that you can handle different types of credit responsibly.

5. New Credit (10%)

Quickly opening multiple new credit accounts can lower your score due to complex inquiries. However, having one or two new accounts, when managed responsibly, won’t negatively affect your score for long.

Can You Build a Credit Score Without a Credit Card?

Yes, You Can Have a Credit Score Without a Credit Card

Contrary to common belief, having a credit card is not the only way to build a credit score. Credit cards are just one of many financial tools that impact your score, but are not essential. So, how exactly can you build credit without relying on a credit card?

Here are some ways you can establish a credit history and build a solid credit score without ever using a credit card:

How Can You Build Credit Without a Credit Card?

1. Apply for a Credit-Builder Loan

A credit-builder loan is one of the best ways to build credit without a credit card. These loans are designed to help individuals with no credit history or those looking to rebuild their credit. The process works like this: You take out a small loan (usually between $300 and $1,000), and instead of receiving the loan amount upfront, the lender deposits the money into a savings account. You then make monthly payments on the loan, which are reported to the credit bureaus.

The credit-builder loan can help you establish a positive payment history and improve your credit score as long as you make your payments on time.

Read related blog: Why Credit Score Doesn’t Always Reflect Your Financial Health

2. Become an Authorized User on Someone Else’s Account

If you have a family member or friend with good credit habits, becoming an authorized user on their credit card account can be an easy way to build credit. As an authorized user, you’re added to the primary cardholder’s account, and the account’s positive history is reflected on your credit report.

It’s important to note that authorized users don’t have to make payments on the card, but the primary account holder’s responsible credit card usage (making payments on time, keeping utilization low) will positively impact your credit score.

3. Use Rent Payment Reporting Services

While rent payments don’t typically appear on your credit report, some services will report your monthly rent payments to the credit bureaus, such as RentTrack or Experian RentBureau. These services allow you to build credit by paying your rent on time each month.

If you’re renting and paying your rent regularly, this can be a powerful way to establish credit without needing a credit card. Check with your landlord or property management company to see if they report rent payments to the credit bureaus, or consider signing up for a rent payment service.

4. Apply for a Secured Credit Card

Although the question is about building credit without a credit card, a secured credit card is an excellent alternative if you’re new to credit or looking to rebuild. A secured credit card requires a deposit as collateral, which becomes your credit limit. For example, if you deposit $500, you’ll have a $500 credit limit.

Secured credit cards work like regular ones, but because your deposit backs them, they’re easier to approve. Use the card responsibly by keeping your credit utilization low and paying your bill on time, and it will help build your credit over time.

Read related blog: The 7 Golden Rules: How to Use Credit Cards to Boost Your Credit Score the Right Way

5. Use Alternative Data to Build Credit

Some companies use alternative credit data, such as utility payments (e.g., electricity, gas, water), phone bills, or insurance payments, to help consumers build credit. For example, Experian Boost is a service that allows you to add your utility and phone payments to your credit report, which can help increase your score.

These payments are often not reported to the credit bureaus, but services like Experian Boost allow you to add them. Using alternative data to build credit, you can create a credit history without relying on a traditional credit card.

Beem helps you use your money and payments to build credit without a traditional credit facility. 

How Long Does It Take to Build a Credit Score Without a Credit Card?

3 to 6 Months of Activity

Building a credit score without a credit card takes longer than using one, but it is entirely possible. On average, you’ll need about 3 to 6 months of consistent activity to generate a FICO score. The time it takes to build credit depends on several factors, including how often you’re reporting payments, the types of credit you have, and how responsible you are with your payments.

Read related blog: Should You Close Old Credit Cards? Impact on Credit Score

Managing Your Credit Wisely Without a Credit Card

Focus on Paying Bills on Time

One of the best ways to build and maintain credit without a credit card is by making timely payments on all your debts, whether they are loans, rent, or utilities. Your payment history is the most significant factor in determining your credit score, so staying on top of bills and making payments on time is crucial for building a strong credit history.

Keep Your Debt-to-Income Ratio Low

Another important aspect of credit management is your debt-to-income (DTI) ratio. This ratio compares your monthly debt payments to your monthly income. Keeping your DTI ratio low shows lenders that you can comfortably manage your debt. While this is often assessed when applying for a loan, it’s also a good way to gauge your financial health.

Use Beem’s Credit Monitoring Tools

Tracking your credit score and understanding how your financial habits affect it is crucial to your success in building credit. Beem’s credit monitoring tools allow you to track changes to your credit report and receive alerts on key activities that could impact your credit score.

Table: Alternative Credit-Building Methods

Method	Description	Pros	Cons	Best For
Credit-Builder Loan	Small loans designed for credit building, with payments reported	Helps build credit history, low interest rates	Limited loan amount, requires upfront fees	Those with no credit or limited credit history
Authorized User	Added to someone else’s credit card account	Build credit based on someone else’s good credit habits	No control over account, dependent on primary account holder	Those with a trusted person willing to add them
Secured Credit Card	Prepaid card that acts as credit	Builds credit with a secured deposit, low approval requirements	Requires a deposit, limited credit limit	Beginners or those looking to rebuild their credit
Rent Payment Reporting	Reporting rent payments to credit bureaus	Builds credit through regular rent payments	May have fees for reporting service	Renters who want to build credit without a credit card
Experian Boost	Adds utility and phone payments to your credit report	Uses alternative data to boost credit score	Only works with certain services, not a complete solution	Those looking to build credit without traditional credit cards

FAQs on Credit Score Without Credit Card

Build Credit With Beem

While credit cards are a popular and effective tool for building credit, they aren’t the only option available. Whether you prefer to avoid credit cards or simply can’t qualify, several alternative ways exist to establish and improve your credit score. You can build a solid credit history by using tools like credit-builder loans, becoming an authorized user, or utilizing rent payment reporting services.

If you’re looking to track your credit and improve your financial health, Beem’s platform offers comprehensive tools to help you monitor your credit score, compare debt relief options, and take control of your financial future. Download the app now!