You can build credit through rent, utility bills, loans, and secured deposit accounts — none of which require a credit card
A credit score measures your history of borrowing and repaying money. Credit cards are one way to build that history, but they are not the only way. Landlords, utility companies, banks, and credit reporting agencies all track whether you pay on time, and many of them report that payment history to the three major credit bureaus — Equifax, Experian, and TransUnion. If you do not want a credit card, or cannot get one, you can build credit by using these other payment channels and making sure they are reported to your credit file.
The key is choosing methods that actually report to the credit bureaus. Paying your electric bill on time helps you, but only if the utility company reports it. Some do; many do not. The methods in this guide are ones that either report by default or can be set up to report with a few extra steps.
Key Takeaways
- Rent payments reported through a third-party service like Rental Kharma or LevelCredit can build credit if your landlord does not report directly to the bureaus.
- A secured savings account or secured loan from a bank or credit union creates a credit record when the lender reports the account to the bureaus.
- Becoming an authorized user on someone else's credit card account can add their payment history to your credit file, though this only works if the card holder has good habits.
- Utility and phone bills build credit only if the company reports to the bureaus; ask before signing up or look for services that report on your behalf.
- Credit-builder loans from credit unions are designed specifically to create a credit history and typically cost $25 to $50 to open.
Rent Reporting Services: Getting Your Landlord's Payments Counted
Rent is often your largest monthly payment, but most landlords do not report it to the credit bureaus. If you pay on time every month, that history disappears — it does not reach your credit file. Rent reporting services bridge that gap by collecting your payment history and sending it to the bureaus on your behalf.
Services like Rental Kharma, LevelCredit, and RentBureau let you upload proof of rent payments — bank statements, cancelled checks, or lease agreements — and they report that history to Equifax, Experian, or TransUnion. Some charge a small monthly fee ($5 to $10); others charge per report. A few are free. Check what each service charges and which bureaus it reports to before you sign up. Not all services report to all three bureaus, so if you want the widest impact on your credit score, choose one that reports to multiple bureaus or use more than one service.
This method works best if you have a long history of on-time rent payments. If you are just starting to rent or have missed payments, the service will report those too, so timing matters. Start reporting when your payment record is clean.
Secured Savings Accounts and Loans: Borrowing From Your Own Money
A secured savings account is a deposit account at a bank or credit union where you put money in, and the bank lends you that same money back at a low interest rate. You make monthly payments on the loan, and the bank reports those payments to the credit bureaus. Because the bank holds your deposit as collateral, there is no risk to them — and no risk to you, since you already own the money.
The process is straightforward. You deposit $500 to $2,500 (the amount varies by institution), the bank creates a loan for roughly that amount, and you repay it over 12 to 24 months. Each on-time payment is reported to the bureaus. When the loan is paid off, you get your deposit back plus any interest you earned. Your credit score rises because you have now demonstrated a pattern of on-time repayment.
Credit unions often offer these accounts under names like "credit-builder loans" or "share-secured loans." Banks offer them too, though less commonly. Call ahead to confirm the institution reports to all three bureaus, because some report to only one or two. The cost is minimal — usually just the interest you pay, which is often lower than a credit card's interest rate.
Credit-Builder Loans: Designed Specifically to Build Credit
A credit-builder loan is a loan product created by credit unions and some banks specifically to help people build credit from scratch. Unlike a traditional loan, you do not receive the money upfront. Instead, the lender holds the loan amount in a savings account while you make monthly payments. Once you have paid off the loan, you receive the full amount.
Here is how it works: You borrow $500. The credit union holds that $500 in a restricted account. You make monthly payments of roughly $50 for 12 months. Each payment is reported to the credit bureaus. After 12 months, you have paid $600 (the $500 plus interest and fees), and you receive the $500 back. You have now built a 12-month payment history and paid roughly $100 in interest and fees for the privilege.
Credit unions are the most common source for these loans. Organizations like Connexus Credit Union, Penfed Credit Union, and many local credit unions offer them. Some require you to be a member first; others let you open membership and take out a loan in the same visit. Fees and interest rates vary, so compare a few credit unions before you choose.
Becoming an Authorized User on Someone Else's Account
If someone you trust — a parent, spouse, or close family member — has a credit card with a strong payment history, you can ask them to add you as an authorized user on their account. Their payment history will be added to your credit file, which can boost your score when ready.
This method works only if the primary account holder has good habits. If they pay late or carry high balances, their negative history will hurt your score too. Before you ask, confirm that the card issuer reports authorized users to the credit bureaus. Most major issuers do, but some do not. Call the card company or check their website to verify.
The authorized user does not have to use the card or even receive it. straightforward being added to the account is enough. However, if you do receive a card and use it, make sure you and the primary holder agree on how you will pay for purchases. The primary holder is responsible for the full balance, so misunderstandings can damage the relationship and the credit.
Utility and Phone Bills: Checking Before You Sign Up
Utility companies and phone providers do not automatically report to the credit bureaus. Most report only when you fall behind or default. However, some companies have started reporting on-time payments as a way to help customers build credit. Before you sign up for a service, ask whether they report to the bureaus and, if so, which ones.
If your current provider does not report, you have two options. First, you can switch to a provider that does — though this may not be practical if you have limited choices in your area. Second, you can use a service like Experian Boost, which pulls your utility and phone payment history from your bank account and adds it to your Experian credit file. Experian Boost is free and can raise your Experian score by up to 60 points if you have a long history of on-time payments.
Keep in mind that Experian Boost only affects your Experian score, not your Equifax or TransUnion scores. If you want all three bureaus to see your utility payments, you will need to use a service that reports to multiple bureaus or use multiple services.
Medical and Retail Store Cards: Limited Credit-Building Options
Some retail stores and medical providers offer their own credit cards or payment plans. These are not credit cards in the traditional sense — they are store-specific or provider-specific accounts. Some report to the credit bureaus; many do not. Before you open one, ask the store or provider directly whether they report payment history to Equifax, Experian, and TransUnion.
If they do report, these accounts can help you build credit, especially if you make small purchases and pay them off quickly. However, they often come with high interest rates and fees if you carry a balance. Use them only if you can pay off the full balance each month and only if they report to the bureaus.
Checking Your Progress: How to Monitor Your Credit as You Build It
As you use these methods, your credit file will grow. You can check your progress for free through AnnualCreditReport.com, which is the official site for free credit reports from all three bureaus. You are may have access to to one free report from each bureau per year. You can space them out — one every four months — to monitor your progress throughout the year.
Credit scores are separate from credit reports. Your report shows your payment history and account details; your score is a number calculated from that history. You can see your score free through many banks, credit card issuers, and services like Credit Karma or NerdWallet. These free scores are usually accurate within a few points of your official score.
As you build credit, your score will rise slowly. It typically takes three to six months of on-time payments before you see a meaningful change. Do not expect a jump overnight. The goal is consistency — making payments on time, every time, for months and years.
Frequently Asked Questions
How long does it take to build credit without a credit card?
Most lenders want to see at least six months of payment history before they consider you for a loan or mortgage. However, a meaningful credit score usually takes 12 to 24 months of consistent on-time payments. The longer your history, the higher your score will climb.
Can I use multiple methods at the same time?
Yes. Using rent reporting, a credit-builder loan, and becoming an authorized user all at once will build your credit faster than using one method alone. Each adds a different type of account to your credit file, which lenders view favorably. Just make sure you can manage all the payments on time.
What if I have missed payments in the past?
Late payments stay on your credit report for seven years, but their impact fades over time. Start building credit now with on-time payments. After 12 to 24 months of clean payment history, your score will improve even though the old late payments are still visible. Lenders care more about recent behavior than old mistakes.
Do I need a bank account to use these methods?
Yes. Most credit-builder loans, secured savings accounts, and rent reporting services require a bank account. If you do not have one, open a basic checking account at a bank or credit union first. Many offer free accounts with no minimum balance.
Will these methods hurt my credit score?
No. Building credit through these methods will not hurt your score. Each new account may cause a small temporary dip (a few points) because the inquiry and new account are noted on your report, but this recovers within a few months as you make on-time payments.