document showcasing a credit report with a credit score and other important numbers

Build Credit With or Without a Credit Card with these Steps

May 9, 2023

Need to finance something, but have little or no credit? Learn how to build credit with or without a credit card.

Your credit score is an indication of your creditworthiness. You want to learn how to build credit to have a good credit score for many reasons, like financial milestones in life. Good credit can also help you qualify for less expensive loans and credit cards. 

Generally, borrowers with better credit scores can potentially qualify for less expensive forms of credit. 

But borrowers with worse credit scores can potentially only qualify for more expensive forms of credit.

Learn how to start building credit with or without a credit card, whether you just want to build a better score or are just starting on your good credit journey. 


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What is Credit? 

what is credit definition

If you want to learn how to build credit then you need to understand what credit is. 

Credit is money available to borrow from a lender or other credit provider. You can get credit through a loan or a credit card.

What is a Credit Score?

what is a credit score definition

Now that you understand what credit is, you also need to understand what a credit score is and how it contributes to building credit. 

A credit score is a number used to show someone's creditworthiness. This score helps financial institutions know your financial wellbeing from a glance and can determine the amount of credit you get approved to borrow. 

Building your credit score is a great way to build your credit. Generally, good credit scores mean more credit available to you, while bad credit means less credit available to you.

Improve your credit score and you'll see your credit build too. 

How to Build Credit with a Credit Card

how to build credit with a credit card

There are many ways to build credit with or without a credit card. First, let's go over how to build credit WITH a credit card. 

Use Revolving Credit

Another term for the type of credit used in credit cards is revolving credit. Responsibly using a credit card is one of the ways you can start building a strong credit history. 

This line of credit has a set amount of money you can borrow from. Borrowers can then use that allotted credit amount, pay it back, and still have that same credit limit to borrow from.

Use a Secured Credit Card 

Research different credit cards and shop around for one that fits your needs and doesn't have an interest rate that's too high. Applying for a secured credit card can be a great place to start.

This type of card has the cardholder pay a cash deposit when they open the account. This acts like a down payment on this credit line. 

Unsecured credit cards don't have the cardholder pay a deposit to secure the credit limit. These types of cards can thus be harder to qualify for. 

If you are looking for a credit card that is easier to qualify for and can help you build credit, a secured credit card may be right for you. 

Pay Off Credit Card Balances Quickly

Always make sure you pay off credit card balances each month. This will help you build credit without accruing too much interest. 

Don't spend money on a credit card that you don't have in your checking account. This will help make sure you can aways pay off your balance each month. 

Keep a Low Credit Utilization Rate

A credit utilization rate is your total credit used divided by your total available credit. 

credit utilization rate formula

This percentage shows how much of your available credit you are using. You want to keep this rate as low as possible to build better credit.

In general, it's a good idea to keep this percentage below 30%

How to Build Credit without a Credit Card 

how to build credit without a credit card

There are also methods for how to build credit WITHOUT a credit card using different types of credit.

Many people don't like using credit cards. One reason to avoid credit cards is if you have a hard time sticking to a budget and not overspending.

Luckily, you don't have to have a credit card to build credit. There are many different types of credit you can use instead. 

Use a Credit Builder Loan 

If you have little to no credit, then you might benefit from a credit builder loan. This type of loan is different from traditional loans.

Instead of receiving the loan money and then paying that money back, the borrower will pay the loan amount first, and receive the loan money at the end. 

Use Installment Credit

Installment credit is a type of credit that gives borrowers a fixed amount of money to use over during a specific period of time. This type of credit is borrowed all at once, and then repaid over a period of time through regularly scheduled payments.

Installment loans, personal loans, and title loans are some examples of loans that can sometimes use installment payments, where as payday loans are typically paid at once. 

Make those loan payments on time and make sure that positive payment history is added to your credit reporting history to positively impact your overall credit score.

Pay Bills on Time

Another method is to pay your bills on time. Everyone has monthly bills for things like rent, utilities, phone plans, insurance, and more.

Make sure your bill payments are being counted toward your overall score. All of these bills can help build up your score when you pay bills in full and on time each month. 

Use Service Credit 

Another way to build credit without using a credit card is to use service credit. This type of credit refers to accounts with different service providers like utilities, cable, and cell phone bills. 

It allows you to use these services on credit and pay that credit later. When you make these payments on time, this can sometimes build your credit, especially if you use Experian Boost. 

How to Build Credit with No Credit History

how to build credit with no credit history

Forget whether you do or don't have a credit card, what about how to build credit with no credit history to start with? If you are building your credit from scratch, there are a few things you can do. 

Get an Authorized User Credit Card

If you have no credit history, it can be hard to get approved for a credit card.

One way to work around this is to become an authorized user on someone else's credit card, like your parent's credit card.

Then you can start piggybacking off the primary cardholder's access to credit to start building your own.

Make On-Time Bill Payments

Another good place to start building credit when you have none is to pay bills on time month to month.

You can pay your bills on time at a Check City store with Check City Bill Pay Services

Young people who are still living at home can also start building credit early by paying their own phone bill on time each month.

Just make sure your name is associated with the phone bill so that your phone bill payments are reported to the credit bureaus. 


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How Long Does It Take to Build Credit?

how long does it take to build credit

To build credit from scratch, it takes at least 6 months. Then you will start to see your score on statement credit reports or a card issuers report. 

The key is to spend several consecutive months repaying loans, credit card balances, and making on-time bill payments to build credit and increase your score. 

Request a copy of your credit report and check your FICO score today so you can compare results after trying these credit building tips.