How to Build Credit Without Credit Cards

About 26 million Americans are credit invisible with no credit history, or have “unscorable” credit, lacking enough credit history to generate a credit score.¹ Without a strong credit history, it is more difficult to get approved for financial products like a loan, a property lease, or a mortgage. If you fall into this category, you can build your credit safely by following these steps.

Request Your Report

Your credit score is determined from your credit report and includes a combination of your past credit usage, available credit limit, and payment history. The three credit reporting bureaus—Equifax, Experian, and TransUnion—provide your report free once a year, and you can request yours at AnnualCreditReport.com.

Texell members can view their credit score at no cost by opting in to Credit Score and More in Digital Banking. Learn more about your credit score and report in 5 Credit Score Myths.

Apply for Credit-building Loans

One option for building credit is a credit-building or secured loan. These use funds in either a savings account or certificate of deposit (CD) as collateral for your loan. By making monthly payments on time on secured loans, you’re proving to the lender that you’re financially responsible. This builds your credit history and improves your credit score. Texell offers personal and secured loans, and our lending experts can provide a personalized consultation during the application process.

Another option is to become an authorized user on a credit account owned by a trusted family member. You could also ask them to be a cosigner for a loan if they have good credit history. Keep in mind that being added to an account or cosigning a loan means both of you are liable for the debt. If your cosigner doesn’t make regular payments, your credit could take a hit.

Track Your Spending

Before getting a loan or other credit account, establish a budget and track your spending. Making payments on time is crucial for raising your credit score. Other expenses may be eligible to increase your credit score, like utilities and monthly rent payments. For rent payments to count, you might have to ask your landlord to enroll in a rental reporting program. Examples of these programs include Rental Kharma, PayYourRent, and RentReporters, and some offer other tools for landlords, like maintenance requests. Boom is a rental reporting app that doesn’t require your property owner to sign up, and it reports rent to all three credit bureaus.

Other services, like Experian Boost and eCredable Lift, allow you to add cell phone, utilities, and rent payments to your credit report. Experian Boost is a program offered by the Experian credit bureau that tracks payments made on cell phones, rent, internet, utilities, and certain streaming services. The downside to this program is that it requires at least one active credit account, like a personal loan or credit card, but it’s useful if you are looking for another way to build your credit score.

Although it only reports to TransUnion, eCredable Lift connects to over 2,000 utility companies and allows you to link up to eight to track payments to improve your score. This program reports up to 24 months of payment history to TransUnion, but it reports both on-time and late payments, so be mindful when choosing which accounts to track.

Continue to Pay Off Debt

No matter which option you choose, make sure you’re staying within your budget and making payments on time. Avoid scams that promise to instantly raise your score for a fee or payment plan. Building credit takes time, patience, and the persistence of being financially responsible. Learn more in 4 Ways to Start Building Credit.
¹ What does it mean to be credit invisible? By Alexandria White from cnbc.com.

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