Pentagon Federal Credit Union
Login Accounts
Search
  • Routing # 256078446
  • Partners
  • Member Discounts
  • Wealth
  • Foundation
  • Branches & ATMs
  • About
  • Search
  • Checking & Savings
    • Checking
      • Free Checking
      • Access America Checking
      • All Checking Accounts
    • Savings
      • Premium Online Savings
      • Regular Savings
      • Money Market Savings
      • All Savings Accounts
    • Certificates
      • Money Market Certificate
      • Coverdell Education Certificate
      • All Certificates
    • IRAs
      • IRA Certificate
      • IRA Premier
      • IRA Savings Account
      • All IRAs
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Great rates for everyone with our savings options
  • Credit Cards
    • Our Cards
      • Credit Cards Overview
    • How Can We Help?
      • Contact Us
      • FAQs
      • Disclosures
      • Resource Center
    • Special
      • Choose the perfect card - Learn More
  • Auto
    • Auto Loans
      • Purchase
      • Refinance
      • Car Buying Service
    • Protection
      • Vehicle Protection
      • GAP Insurance
      • Debt Protection
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Find your next car - through PenFed Car Buying Service
  • Mortgage & Home Equity
    • Purchase
      • Buy a Home
      • VA Loan
      • FHA
      • Conventional Fixed
      • Jumbo Loan
      • Power Buyer
    • Refinance
      • Refinance your Home
      • VA Streamline
    • Home Equity
      • HELOC
    • Real Estate Services
      • Find An Agent
    • Tools & Resources
      • Knowledge Center
      • eBooks
      • New Homebuyer
      • Calculators
      • PenFed Title, LLC
      • Contact
    • Special
      • Increase your wins , Become power buyer certified
  • Loans
    • Personal Loans
      • Personal Loans
    • Student Loans
      • Student Loan Refinancing
      • In-School Student Loans
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Personal Loans made easy online
  • Learn
    • Learning Hub
      • Learning Center
      • Mortgage Knowledge Center
      • Advice Center
      • Financial Hardship Center
      • Emergency Furlough Relief Assistance
      • Natural Disaster Relief Assistance
    • About PenFed
      • About
      • FAQs
      • Forms
    • Security & Fraud
      • Security Center
    • How Can We Help?
      • Press Room
      • Careers
      • Contact Us
    • Special
      • Exclusive Member Offer - Spectrum mobile
  • Join Now
  • Log In
  • Accounts
  • Resources

Affinity Title

LEARNING CENTER

To get ahead you have to stay informed.
  1. Home
  2. Learning Center
  3. How to Build Credit Without a Credit Card

FINANCE

How to Build Credit Without a Credit Card

EXPECTED READ TIME: 5 MINUTES

October 8, 2021 | Updated May 27, 2022

Once you build good credit, a world of opportunity opens up, from better interest rates to big purchases like cars and homes. Good credit can even save you money on insurance and housing applications.  

And while they can help you build credit, credit cards aren’t the right choice for everyone. Interest charges and fees can make them an expensive option, especially if you’re a young adult just starting out or just a regular adult with a lot of standing debt.

What We'll Cover

  • Use Experian Boost
  • Get Credit for Your Rent Payments
  • Get a Credit Builder Loan
  • Become an Authorized User on Someone Else's Credit Card
  • Make Your Loan Payments on Time
  • How Long Does It Take to Build Credit Without a Credit Card?
Infographic on how to build credit without a credit card

5 Ways to Build Credit Without a Credit Card

Thankfully, there are lots of great options for building your credit that don’t include applying for another credit card.

1. Use Experian Boost

You make lots of regular payments on things like your phone plan, internet, utilities, and other subscription services that don’t count toward your credit score. However, with Experian Boost, you can have these payments reported to your Experian credit report. Simply sign up, link your bank account, and Experian’s tool will comb through your charges, documenting any qualifying payments.

Your rent payments could raise your credit score by more than 40 points if you have a good payment record.

Experian Boost is a free service provided by the well-known credit bureau of the same name. To be eligible, users must have at least one active credit account, such as a credit card or personal loan.

2. Get Credit for Your Rent Payments

Most landlords don’t report rent payments to credit bureaus. This is a shame because reporting your rent payments could raise your credit score by more than 40 points if you have a good payment record.

You can always ask your landlord to use one of the many services that enable landlords to report rent payments. However, some landlords don’t want the hassle or fees that come with these services. Thankfully, you can also report your rent payments yourself using tools like RentBureau, PayYourRent, or eRentPayment. Just be sure to compare prices and make sure whatever tool you use reports your payments to all three credit bureaus.

Your rent payments could raise your credit score by more than 40 points if you have a good payment record.

3. Get a Credit Builder Loan

Taking out a loan will lower your credit score temporarily because opening new lines of credit drops your credit rating. However, the long-term improvement you’ll see from this type of loan will be worth the short-term drop in credit.

What Is a Credit Builder Loan?

Credit builder loans are designed for people with little or no credit history. While they don’t require borrowers to have a good credit score, you will still be evaluated and approved for a credit builder loan. During the approval process, lenders will consider any other debt you have and expect you to provide proof of income.

If you take out a credit builder loan, make sure you can easily afford your payments.
Once approved for the loan, you will borrow an amount from the lending institution. But instead of releasing the money to you, your bank or credit union will hold the money in a special account where it gains interest. The money and interest in this account act as collateral while you are repaying the loan, but once it’s repaid, all the money in the account is yours to keep.  

If you take out a credit builder loan, make sure you can easily afford your payments. Missing, late, or partial payments will damage your credit, not improve it. Also, make sure your lender is reporting your payments to all three major credit bureaus to get the maximum benefit.

Icon money

Curious about personal loan options? Our calculator helps you estimate monthly payments.

Try It Now

4. Become an Authorized User on Someone Else’s Credit Card

If you’re just starting out, it may feel like you need credit to build credit. After all, it’s much harder to take out a loan or get a credit card if you don’t have much credit history.

One way around this is by becoming an authorized user on another person’s credit card. Authorized users receive their own card and can make purchases with the cardholder’s credit. All payments on the credit card account will be reported to credit bureaus for both the cardholder and the authorized user, creating a regular payment history for the authorized user.

Of course, being an authorized user can be risky. If the primary cardholder isn’t making full, on time payments then your credit can actually be hurt by being associated with their credit card account

Make sure your lender is reporting your payments to all three major credit bureaus to get the maximum benefit.

5. Make Your Loan Payments on Time

Making regular, on-time payments is one of the best ways to build credit. In fact, your payment history accounts for 35% of your credit score.

Keeping on top of loans you already have is a good place to start. Paying consistently on your student loans, personal loans, auto loans, and mortgage helps you build a strong payment history, increasing your credit score.

Making regular, on-time payments is one of the best ways to build credit.

How Long Does It Take to Build Credit Without a Credit Card?

Credit bureaus calculate your credit score using a formula. The formula considers factors like your payment history, credit mix, and how much debt you carry to determine how safe it is for lenders to loan you money.

It takes between three and six months of regular credit activity before credit bureaus can calculate a credit score for you. People with more loans will establish credit faster than people with fewer loans because credit bureaus receive information from each line of credit you have open.

Icons

Did you know your credit score and credit report are two different things?

Learn More

However, opening too many lines of credit too quickly can also drop your score, so it’s important to be patient and diligent as you build credit. Once you’ve established a credit history, improving your credit score can be an ongoing part of your financial wellness habits.  

The Takeaway

Building your credit score is important, but it doesn’t have to be expensive. If credit cards aren’t right for you, there are other options that can be just as effective. We always suggest making choices that fit with your current financial situation and long-term financial goals.

Learn More About Personal Loan Options at PenFed 

Discover the diverse offering of products, services, and support available to our members.  

Learn More

SIMILAR ARTICLES

The Ultimate Guide to Understanding Credit Scores

Your credit score allows lenders to quickly gauge your creditworthiness. Read on to find out exactly how this three-digit number works.
man reviewing credit score

What Your Credit Says About You

Good credit is something entirely in your control. Learn what your credit means to financial institutions, and what you can do to improve it.
man looking at credit score

How Do I Improve My Credit Score?

You might be asking yourself; how do I improve my credit score? Follow these tips to manage finances and watch your credit score grow.
man in coffee shop looking at laptop

Does Applying for a Credit Card Hurt Your Credit Score?

Your credit score takes a hit each time you apply for a credit card, so be smart about when and how often you open new credit accounts.
applying for credit card
  • Locations
  • Careers
  • Press Room
  • Foundation
  • Contact Us

This credit union is federally insured by the National Credit Union Administration. Rates are current as of September 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


  • facebook
  • twitter
  • linkedin
  • youtube
  • instagram
Download the PenFed app on Apple Store Download the PenFed app on Google Play
Read More about Equal Housing
Routing #256078446

©2023 Pentagon Federal Credit Union

Privacy
Security
Disclosures
Fees
Rates
Forms
Site Map

We use cookies to provide you with better experiences and allow you to navigate our website. By clicking “I Accept”, you consent to our use of cookies in accordance with our Privacy, GDPR and Cookie Policies.If you are a California resident, please visit our Privacy Policy page for the Notice of Right to Opt-Out of Sharing.

×

IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


CONTINUE OR CANCEL

Member Login

Please enter a valid username.

I need help logging in

Having Trouble?
Forgot Username
Forgot Password
Forgot Username and Password
Unlock Account


First time logging in?

Create an online account

Not yet a member?

Become a member and take advantage of products and exclusive offers!

Join Now

Get Started

×

LOGIN

JOIN
Dismiss
PenFed App
PenFed PenFed, Inc FREE - On Google Play