July 27, 2023

Credit-Building: Non-Credit Card Approaches

Discover data-driven strategies to improve your credit score without relying on credit cards

Having a strong credit history is essential for various financial transactions, such as obtaining loans, renting apartments, or even setting up utility accounts. While credit cards are often the primary means to build credit fast, not everyone may have access to them due to a low credit score. 

In this article, we will explore unconventional yet data-driven strategies without relying on credit cards to build credit. These strategies include utilizing credit builder loans, personal loans, car loans, reporting alternate payments, applying for secured credit cards, becoming an authorized user, and more. 

Read more: 8 reasons why your credit score is important

How to Build Credit Without Credit Cards?

By understanding the following methods and implementing them responsibly, individuals can effectively rebuild their credit and pave the way for a healthier financial future.

1. Take Out a Credit-Building Loan

A credit-builder loan is an excellent option for individuals with limited credit history or poor credit scores. Traditional loans may be difficult to obtain under such circumstances, making credit builder loans a valuable tool for financial recovery. When applying for a credit builder loan, your lender deposits the loan amount (typically ranging from $300 to $1,000) into a savings or CD account. Instead of receiving money upfront,  the loan amount is deposited in your bank account, which you can only access once the loan is repaid.  

For example, let's consider Sarah, who has just graduated from college and is eager to start building her credit. Since she doesn't have a substantial credit history, getting a regular loan proves to be challenging. Instead, she decides to opt for a credit builder loan to establish a positive credit history.

Credit builder loans are best ways to build credit since they help consumers establish a solid credit history without requiring further spending. There are two types of credit builder loans: secured and unsecured. Bright Builder, offered by Bright Money, is a secured credit builder loan. On the other hand, there are unsecured credit builder loans available from various providers.

Bright Builder's secured credit builder loan comes with a remarkable 0% APR, making it an excellent option for those looking to build credit without incurring interest charges. The APR on unsecured credit builder loans typically ranges from 5% to 15%, which remains lower compared to other types of loans. It may take a few months to notice the credit score improvement as responsible payments are reported to credit bureaus over time.[1][2][3]

Ready to take control of your credit and secure a brighter financial future? Discover the power of our Credit-Building Loan at Bright Money! Build a strong credit history with on-time payments, and watch your credit score soar to new heights.

2. Request a Personal Loan

Personal loans provide another avenue for building credit without relying on credit cards. Unlike credit builder loans, personal loans do not require a security deposit, but they may have higher interest rates, especially for applicants with limited credit history or previous defaults on loans. It is crucial to carefully assess one's ability to repay the loan before committing to it, as failure to make timely payments can negatively affect the credit score. 

Let's take John as an example, who wants to apply for a personal loan to pay for unforeseen medical costs. He is aware that getting this loan may be a chance to improve his credit, but he also recognizes the value of picking a loan size and repayment period that is compatible with his financial situation.

When obtaining a personal loan, it is essential to choose a repayment term and amount that aligns with one's financial capacity. Individuals can demonstrate responsible credit behavior and establish a positive credit history by making consistent, on-time payments and paying off the loan as quickly as possible.

Applying for and responsibly managing a personal loan can positively impact the credit score, resulting in gradual improvements over time. The APR on personal loans can range from 6% to 36% or higher, depending on factors like creditworthiness and loan terms. Observing the credit score's improvement may take several months as the borrower makes timely payments and demonstrates responsible loan management.[1][2][3][4]

3. Think About a Car Loan

Car loans offer a unique opportunity to build credit fast while simultaneously meeting a practical need. When individuals finance the purchase of a vehicle through a car loan and make timely payments, this positive financial behavior gets reported to credit bureaus. 

Opting for a used car loan over a new car loan can be a strategic move for someone like Mark, who is keen on building credit while meeting a practical need. Used car loans typically involve borrowing a smaller amount compared to new car loans, as used cars generally have a lower purchase price. This can make managing the loan more manageable and affordable for borrowers, especially if they are just starting to build their credit.

Mark's decision to finance a used car purchase through a loan offers him a unique opportunity to showcase responsible financial behavior to credit bureaus. By making consistent and on-time payments, he demonstrates his reliability as a borrower, which has a positive impact on his credit score. Timely payments and successful loan management are crucial factors that contribute to building a solid credit history.

Furthermore, since used car loans usually come with shorter repayment terms compared to new car loans, Mark can potentially build credit faster. The shorter loan duration means that he will pay off the loan in a shorter period, which helps establish a positive credit history more quickly.

However, it is essential to choose a car loan with a reasonable interest rate and monthly payments that fit comfortably within one's budget. By responsibly managing a car loan and adhering to the agreed-upon payment schedule, individuals can show lenders their ability to handle credit responsibly. 

The APR on car loans typically ranges from 3% to 10% or higher, contingent on creditworthiness and loan terms. Consistently making on-time payments on a car loan can significantly improve credit score, making it one of the best ways to build credit without relying on credit cards.[1][5]

4. Payoff Current Loans

For those who already have existing loans, such as student loans, responsibly repaying them can contribute to credit improvement. Timely and consistent payments demonstrate financial responsibility and showcase the borrower's ability to handle credit obligations. 

Take Lisa, for instance, who has a vehicle loan plus education loans. She carefully manages her finances and makes sure to make monthly loan payments on time for both loans, which helps her build a good credit history and raise her credit score.

By following the terms of the loan agreement and avoiding defaults, borrowers can positively impact their credit scores. It is crucial to stay organized and keep track of repayment deadlines for existing loans. The credit score's improvement will be observed over time as the borrower continues to make responsible payments on existing loans.

Missing payments or defaulting on loans can severely damage credit scores, making it more challenging to recover financially. Responsible loan management is a crucial aspect of improving credit scores without using credit cards to build credit.[1][2]

Read more: Should I pay my credit card bill as soon as I get it?

5. Indicate Alternative Payments

Credit reporting agencies have started to recognize the importance of alternative payment data in evaluating creditworthiness. While most landlords do not typically report rent payments to credit bureaus, consistently paying rent on time demonstrates financial responsibility and stability. 

For example, let's consider Alex, who has been renting an apartment for the past few years. Even though his rent payments are not directly reported to credit bureaus, he ensures he pays rent on time every month, reflecting his financial responsibility positively.

Other recurring payments, such as utility bills, cable, internet, and mobile phone contracts, can also be used to bolster credit scores. Some services, like Experian Boost, allow individuals to report their alternate payment data to credit bureaus, which can positively improve credit score

The impact on the credit score can be seen relatively quickly once the alternative payment data is reported to credit bureaus, usually within a few weeks to a couple of months. By ensuring timely payments on these regular expenses, individuals can build a stronger credit profile and showcase their financial reliability to potential lenders.[1][3]

Sign up for Bright Money's app and unlock the path to financial recovery and a stronger credit score today!

6. Obtain a Secured Credit Card

Secured credit cards provide a viable option for individuals with limited credit history or poor credit scores to build credit fast without the risk of overspending. With secured credit cards, applicants are required to provide a cash deposit as collateral, typically equal to their credit limit. 

Consider Suruchi, who recently started her first job and is trying to establish credit. She applies for a secured credit card and deposits $500 in cash, serving as her credit limit. By serving as security for the lender, this deposit lowers the risk of Suruchi's insufficient credit history.

Responsible use of a secured credit card is crucial for credit building. Cardholders should aim to make timely payments and keep their credit utilization ratio (credit used versus available credit) low. Over time, demonstrating responsible credit behavior with a secured credit card can lead to an upgrade to an unsecured credit card or an increase in credit limit, further boosting the individual's creditworthiness.

Using a secured credit card responsibly can positively impact the credit score, with the increase varying based on the individual's credit history and card management. Due to increased lender risk, secured credit cards usually have higher APRs, ranging from 15% to 25% or higher. It may take several months of responsible card usage and on-time payments to observe a noticeable improvement in the credit score.[1][3][6]

7. Become a Registered User

Becoming an authorized user on someone else's credit card can be a viable strategy to build credit fast without the need for one's credit card. When added as an authorized user, individuals receive a physical card and gain access to the main cardholder's credit line.

For example, Tom, wants to boost his credit score but currently doesn’t qualify for a credit card due to his limited credit history. His friend Sarah, who has an established credit history and a good credit score, adds Tom as an authorized user on her credit card.

The authorized user's activity on the card, including purchases and payments, gets reported to credit bureaus. Tom ensures responsible use of the credit card by making small purchases and paying off the balance in full each month.

While being an authorized user can help build credit fast, choosing a primary cardholder with a good credit history is essential. If the main cardholder defaults on payments or maxes out their credit limit, it can also negatively impact the authorized user's credit score. 

Becoming an authorized user on someone else's credit card can positively impact the authorized user's credit score, provided the primary cardholder maintains a good credit history and makes timely payments. 

Adding an authorized user does not affect the APR on the primary cardholder's credit card. The impact on the authorized user's credit score will be visible over several months as the positive credit behavior of the primary cardholder is reported to credit bureaus.[1][3]


Building credit without using credit cards is possible through various unconventional methods. Credit builder loans, personal loans, car loans, and responsibly repaying existing loans provide opportunities to establish a positive credit history. Reporting alternate payments, such as rent and utility bills, can also improve credit. Secured credit cards and becoming authorized users offer avenues for demonstrating creditworthiness without the risk of overspending.

Regardless of the chosen method, responsible credit management is paramount for successful credit building. Timely payments, maintaining a low credit utilization ratio, and maximizing credit history are key factors to improve credit scores. By adopting these data-driven strategies and handling credit responsibly, individuals can recover financially and open doors to better financial opportunities in the future.

Ready to take control of your finances and build credit with ease? Download Bright Money's app now!


  1. https://www.bankrate.com/personal-finance/credit/how-to-build-credit-without-credit-card/
  2. https://www.investopedia.com/articles/personal-finance/032515/do-i-need-credit-card-build-my-credit.asp
  3. https://www.creditmantri.com/article-5-ways-to-build-a-strong-credit-score-without-credit-card/
  4. https://www.investopedia.com/terms/p/personal-interest.asp
  5. https://www.valuepenguin.com/auto-loans/average-auto-loan-interest-rates
  6. https://www.bankrate.com/finance/credit-cards/what-is-credit-card-apr/


Q. How long does it take to see improvements in my credit score using these methods?

The timeline for credit score improvements can vary depending on individual financial situations and the specific strategies used. Generally, consistent on-time payments and responsible credit behavior can lead to noticeable improvements within six months to a year. However, building a robust credit history may take longer, especially for those starting with limited credit.

Q. Will my credit score be negatively affected if I miss a payment on a credit builder loan?

Yes, missing payments on a credit builder loan can have adverse effects on your credit score. Timely payments are crucial to building a positive credit history. One missed payment can result in a significant drop in your score and undo the progress made.

Q. Can reporting alternate payments, like rent, replace the need for a credit card?

While reporting alternate payments can positively impact your credit score, having a mix of credit types is beneficial. Credit cards offer different credit utilization scenarios and account types, contributing to a diverse credit profile. Utilizing both alternate payments and credit cards responsibly can yield more robust credit growth.

Q. Is becoming an authorized user on someone else's credit card risky for my credit score?

While becoming an authorized user can help improve your credit score, it comes with some risks. If the primary cardholder defaults or mismanages the credit card, your credit score could be negatively impacted. Choosing a responsible primary cardholder and maintaining open communication can mitigate potential risks.

Q. Can I build credit effectively without taking out any loans?

Yes, you can build credit without loans by focusing on reporting alternate payments, responsible use of secured credit cards, and being added as an authorized user. However, utilizing various credit types, including loans, can strengthen your credit history, leading to a more comprehensive credit score. A balanced approach incorporating different strategies can yield the best results.

* Payment history has the biggest impact on credit score accounting for 40% of how score is calculated per TransUnion (https://www.transunion.com/credit-score). Bright Builder helps you build a payment history that may positively improve your credit score. A credit score increase is not guaranteed. Individual results may vary. Late payments, missed payments, or other defaults on your accounts with us or others will have a negative effect on your credit score. Products and services are subject to state residency and regulatory requirements. Bright Builder is currently not available in all states.

Abhishek Raj
Technical Content Writer
Get the Bright App
AI Powered App, to Delete Debt

Subscribe to stay up-to-date on exclusive stories from Bright.
Reach out and request help as required.
Enter e-mail id
Thank you! Your submission has been received!
Please enter a valid email