How to Build Credit Without a Credit Card

If you’re looking to build or rebuild credit, some of the first suggestions you’ll hear is to apply for a regular or secured credit card or ask to become an authorized user on someone else’s card. But there’s often little said about how to do it if you want to stay away from plastic. What can you do then?

First, a little about the different kinds of credit. There are two basic types: revolving and non-revolving. Revolving credit is a credit line you can access more than once — credit cards are the most common example. If you have a credit card with a $1,000 limit, and you buy a $50 pair of shoes, once you pay your balance, in full, you have access to your full limit again. It’s reusable credit.

Non-revolving credit — referred to as “installment” credit on credit reports — does not have the reusability feature. If you have a student loan, car loan or mortgage, you have an installment account. You borrow a specific amount then pay it back.

Both revolving and non-revolving credit accounts can build credit, so you don’t need a credit card to improve your credit scores. A non-revolving credit account like a car loan or a mortgage will help build your credit, as long as you practice the basics of good credit. Payment history accounts for 35% of your score, and that’s the largest influencing factor. So paying your bills on time is crucial to building credit, no matter what type of credit you have.

If you decide to build credit without using credit cards, you should know that there is a big credit score caveat: 10% of your credit score is determined by the diversity of credit accounts you have. This means a lack of revolving accounts can hurt your scores in that category. Generally, consumers with high credit scores have some revolving credit.

If you’re trying to build credit for the first time, it may be difficult to get a non-revolving credit account like a car loan or a mortgage without some sort of credit score. Generally, secured credit cards are the easiest credit accounts to qualify for, which is why many experts recommend them as “starter” credit accounts that newbies can use to build their scores and then upgrade to regular credit cards or loans. Otherwise, if you already have student loans, you’ll build credit by making those payments on time every month. You may also be able to get a “credit builder” loan from your bank or credit union.

If you already have a credit score and want to rebuild your credit, you may find it easier to get a non-revolving credit account like a car loan than someone who doesn’t have any credit score. But you’ll probably pay a higher rate than you would if you had good credit.

Either way, you’ll want to track your progress as you build credit. You can see your credit data for free on Credit.com, and you’ll also see a personalized guide to improving your score. The guide will likely recommend applying for a credit card, but if that’s something you don’t want to do, focus on comparing rates on other types of credit that you may qualify for.

It may be a little trickier to get a high credit score without revolving credit, but it’s far from impossible.