If you’re new to credit or have had trouble with credit cards in the past, you might be hesitant to open a new credit card account. Luckily, you don’t need a credit card to build credit. There are several ways to establish good credit without relying on plastic. In this post, we’ll explore some simple ways to build credit without a credit card, including the pros and cons of each method.
1. Become an authorized user
If you have a friend or family member with good credit, ask them to add you as an authorized user to their credit cards. You’ll get your own card with your name on it, but the primary cardholder is responsible for paying the bill. As long as the primary cardholder pays on time and keeps the balance low, you’ll benefit from their good credit history.
- Pros: It’s an easy way to build credit, especially if you have a trusted friend or family member who’s willing to add you as an authorized user.
- Cons: If the primary cardholder misses payments or has a high balance, it could hurt your credit score.
2. Get a small personal loan
You don’t need a credit card to get a loan. You can get a small personal loan from a bank or credit union and make payments on time.
- Pros: You’ll be building credit while also establishing a relationship with a bank or credit union.
- Cons: Personal loans can have high interest rates, so make sure to shop around for the best rate.
3. Report alternate payments like rent
Many credit reporting agencies now allow you to report alternate payments like rent, utility bills, and phone bills. By reporting these payments, you can build credit without a credit card. Talk to your landlord and see if they will do it. TransUnion CreditVision Link allows landlords and property managers to report rent payments to the credit bureaus. They also accept utility bills and other payments.
- Pros: It’s a good way to build credit if you don’t have a credit card or loan.
- Cons: Not all credit reporting agencies accept alternate payments, so make sure to check with the agency first.
4. Try Brigit’s Credit Builder*
Brigit’s Credit Builder allows you to build credit without a credit card. You’ll make payments each month, as little as $1, and they’ll report your payments to the credit bureaus.
- Pros: It’s an easy, affordable, and safe way to build credit and you don’t need a credit card or loan.
- Cons: You need to make sure you’re making payments to see an impact
Fixing bad credit
If you’ve had some missteps with credit in the past, you may have a low credit score. But don’t worry, you can take steps to improve your credit and get back on track. Here are some ways to fix bad credit:
- Pay your bills on time: This is one of the most important things you can do to improve your credit. Late payments can have a big impact on your score, so make sure to pay your bills on time, every time.
- Pay off debts: If you have high balances on your credit cards or other debts, it’s important to pay them off as soon as possible. High debt-to-income ratios can hurt your credit score, so paying off debts can help improve your score.
- Check your credit report: You can get a free copy of your credit report from each of the three major credit bureaus once a year. Check your report for errors and dispute any mistakes you find.
- Get a secured credit card: If you’re having trouble getting approved for a traditional credit card, try a secured credit card. You’ll need to put down a deposit, but you’ll be able to use the card to make purchases and build credit.
- Consider credit counseling: If you’re struggling with debt and can’t seem to get back on track, credit counseling can be a good option. A credit counselor can help you come up with a plan to pay off your debts and improve your credit.
Building credit without a credit card is possible—just like fixing bad credit is. Using Brigit to stay on top of your finances will help you on the path toward financial freedom.
*Impact to score may vary. Some users’ scores may not improve. Results will depend on many factors, including on-time payment history, the status of non-Brigit accounts, and financial history. Results show that customers with a starting credit score of 600 or below were more likely to see positive score change results. A Brigit subscription is required.
Banking services provided by Coastal Community Bank, Member FDIC.