How to Build Credit Without a Credit Card


We know this isn’t Finance 101, so we’ll keep things brief. A good credit score predicts credit behavior based on previous financial decisions that show up on your credit report. And a credit card is not the only financial information on credit reports.   

Many other financial practices and payments can help you build a good credit score. 

As a student, building good credit now will set you up for financial success post-graduation and beyond. A top credit score can help those business majors qualify for excellent new business loans and fund the poli-sci major through law school. 

This article explains how simple it is to build credit as a student with easy-to-follow guidelines to turn you into a credit whiz.

How to Build Credit Without a Credit Card

You don’t need a pesky credit card with high annual fees and low credit limits to get an excellent credit score. Building strong credit history is possible with some innovative moves like becoming an authorized user, taking out a needed loan, and more. 

Here’s how to raise that FICO score without a decent credit card issuer:  

Pay bills on time

We know students are familiar with due dates. Sometimes they have a bad habit of passing without notice (oops). Things like car payments, mortgage payments, student loan payments, and credit card payments are all reported to the bureaus and show up on your credit report. 

Over time, missed payments on these could tank your credit, so we’ve collected our best tips for paying those bills and existing credit accounts on time:  

  1. Write the dates down: Notes app, Google calendar, paste it to your forehead; we don’t care how you do it, just keep a record of bill due dates. 
  2. Set up recurring payments: This isn’t always an option, but when possible, a recurring payment can be a lifesaver during busy times like midterms.  
  3. Rally your roommates: Being responsible for rent payments is really like herding cats. Chat with your roommates on the importance of avoiding late payments. 

Sometimes there’s just no gas in the tank, and a few bills won’t get paid on time. You’re not alone. The majority of college students worry about paying for school and paying their monthly expenses. Financial insecurity is a real issue for modern students, but there are companies out there ready to help

Remember, missing payments could affect your credit, but it’s not the end of the world. There’s always time to make better financial moves and prove you're a responsible spender!

Repay any existing loans

Paying on existing loans is a stellar way to build credit. You already owe them and, typically, they’re just looming over you, threatening your savings account. Chip away at that gray cloud with regular payments. 

Payments on personal loans can build credit just the same as payments on student loans. However, some loan terms may penalize early repayment or have stipulations surrounding early payments. Check the fine print before you set up that payment plan, and don’t forget to add this cost to your monthly budget. 

Get a credit-builder loan 

Many students can’t take out loans due to bad (or no) credit history. It’s tough building credit by paying back loans with no loans to pay, right? That’s where a credit-builder loan comes into play. 

These loans are usually offered at credit unions and community banks and are designed to build great credit. Typically, a small sum of $1,000 or less is placed into a secure account. Then, every month, you’ll pay a set amount on that loan until you’ve “paid off” the loan. Finally, the entire lump sum plus any interest accumulated is yours to use as you please. 

Every payment gets reported to major credit bureaus, and the entire process can bump your credit file.

For more information, check out this report on credit-builder loans and their effectiveness at establishing and increasing credit scores. These are similar to secured credit cards, which could also be useful for credit building. 

Earn credit for rent payments 

You don’t need a credit card to earn credit for rent payments. This is what you need to do: 

  1. Make sure the lease is in your name

  2. Continue making on-time payments

  3. Pay a small fee to a service like Level Credit, which reports your payments to credit bureaus 

  4. Get your landlord registered through the service (if they’re not already)

If you’re confident in your ability to pay rent on time every month, then this is a great method of building credit. Make your rent work for you! 

Use a credit-building tool

Surprise! Credit building isn’t an old, dusty practice anymore. There are online tools to help ease and automate the whole process. 

You’ll be interested in a few main credit-building tools, including Experian Boost and eCredable Lift. They perform a lot of neat functions, like:

  • Report utility payments/utility bills

  • Report cell phone payments

  • Report rent payments

  • Capacity to report some previous payments (up to 24 months old) 

If you have a positive payment history of paying on time, then these tools can be easy, quick methods of building credit. Unfortunately, these tools aren’t all-encompassing, but they can be useful for busy students.

Keep in mind that you’ll have to share your bank account information with these tools. So, maybe avoid credit-building tools if this makes you uncomfy.  

Consider an auto loan 

We’re not saying go out and buy another car just for fun. However, if you do need a vehicle, an auto loan is a classic way of building credit. Young adults (18 to 29) borrowed around $29 billion in car loans in 2022, so you’d be in good company. 

Unlike any federal student loan, an auto loan is usually a traditional installment loan (you make monthly payments). Your payments get reported to credit bureaus to bump your score. 

Know that many lenders require a cosigner and may have higher interest rates. You’ll need to shop around for the right credit card companies that accommodate no credit and even offer car loans for international students

Become an authorized user 

Becoming an authorized user is the ultimate life hack. You can have your own line of credit, build credit with purchases, and bypass pesky credit score requirements. This is how the magic happens: 

  1. A current cardholder (think trusted friend/relative with good credit) adds you to their plan as an authorized user 

  2. You get your own credit card (sweet!)

  3. Any credit action gets reported to bureaus (and your score can grow)

The key term here is any credit action gets reported to bureaus. Typically, any missed payments are reflected badly on both you and the primary cardholder. Pick someone you trust or pass on the authorized user business for now. 

Building Credit Without a Credit Card is Possible with Kora

From credit-builder loans to authorized users, there are many options for building stellar credit without a credit card! Here at Kora, we’re dedicated to offering easy-to-use credit and personal finance features to help you build good credit. This is how we do it:

  • KoraCash: Sometimes, you just need a little help getting through the semester. With KoraCash, you get access to up to $3,000, and payments may help build your credit score. 

  • KoraDrive: Our auto loan is simple and straightforward. There are no SSN, credit score, or cosigner requirements. 

Our stack of powerhouse finance offerings allows those with low or no credit to build a well-rounded financial history. Download our app today for easy access to our top finance tools. 

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