How to build credit without your own credit card

Using a credit card responsibly is a common way to build credit. But it’s not the only way. 

What you’ll learn:

• Becoming an authorized user is one way to access and build credit without opening your own account.

• Credit-builder loans are the reverse of typical loans. As the name implies, they’re designed to help account holders boost their credit scores.

• If you rent, you can ask the landlord to report your rent payments to credit bureaus.

• Keeping your existing loans and bills in good standing can support your credit-building efforts.

Using a credit card responsibly is one way to build credit. That happens when credit card issuers report information about positive credit activity to credit bureaus. That information is then reflected in credit reports, which are used to calculate credit scores.

But issuers aren’t the only companies that report to credit bureaus. Reports from other lenders, service providers and even landlords could also help you build a positive credit history.

As an authorized user on a trusted family member’s or friend’s credit card account, you’ll typically have your own card. But the primary cardholder is ultimately responsible for all charges on the account. If the account is used responsibly and reported to the credit bureaus, it could help you build credit. But negative actions could harm both your credit scores and the other person’s.

According to the Consumer Financial Protection Bureau, credit-builder loans are generally between $300 and $1,000. They’re different from most traditional loans, because account holders pay off the amount owed before they’re allowed access to the money. 

Getting approved for a loan but not having immediate access to your funds may seem contradictory. But one benefit of this type of loan is that you’re building a payment history, the most important credit-scoring factor according to FICO.

Making timely payments on loans other than credit cards can also positively affect your scores. One way is through payment history. The other is because of a credit-scoring factor called credit mix. It’s a measure of the ability to balance and manage multiple loans, including personal installment loans, student loans and auto loans.

Many landlords run credit checks on potential tenants, but not all landlords report rental payments. The credit bureaus say they include rental payment information in their credit reports—but only if they receive the information. So if you’re a renter, you could ask your landlord to consider doing so.

In addition to rent, it’s possible to report other non-credit-account payments—such as cellphone and utility bills—to the credit bureaus, too. Consistent on-time payments of these bills could help you build credit if you use a service to self-report them.

You can build credit even if you don’t have your own credit card account. But it means keeping up with payments and other responsible habits. 

Think your own credit card account is the answer but having trouble getting approved? Secured credit cards are typically easier to qualify for than unsecured cards. And Capital One has two options among its cards designed to build credit.