3 Fantastic Ways to Build Credit Without a Credit Card

In many instances, credit cards provide the fastest route to an improved credit score. Most credit card issuers report your activities to the three main credit bureaus -- Experian, Equifax, and TransUnion -- who weigh and package them into a credit score.

However, if you can't qualify for one right now, or you'd prefer not to risk going into debt, don't worry: You can build a credit score without them. Here are three of the most effective ways.

1. Use rent-reporting services

If you have a history of paying your rent on time, you ought to get rewarded for it. Though landlords don't always report rent payments to credit bureaus on their own, many rent-reporting services will do it for you -- for a price.

For example, Rental Kharma charges $8.95 monthly (after a $75 initial setup fee), but will send your full rent history at your current address to TransUnion and Equifax. Likewise, Rent Reporters charges a $94.95 fee for up to two years of rent history on one lease, plus $9.95 monthly for ongoing reporting, but reports to all three bureaus.

Some landlords may provide rent-reporting services for you for free. For instance, if your landlord or its rental properties are a part of the Bilt Alliance, you can opt in to have your rent reported to all three credit bureaus at no charge. You might, in fact, already be enrolled in a rent-reporting service, as some landlords include it with your lease, so double-check before you subscribe to a third-party service.

Now, here's the real question: Do these services actually work? The answer, unfortunately, is an ambiguous maybe. Rent-reporting services impact the payment history portion of your credit score, which makes up a hefty chunk (for FICO® Scores, it represents the largest portion at 35%). If you have a long history of paying rent on time, then, you could see an improvement, though results will vary for those whose rental histories are short.

2. Get help from your monthly bills

Got a Netflix account? How about a cellphone? If you're paying monthly bills for streaming services, internet, phone, cable, and utilities (gas, electricity, and water), they could help your credit score through Experian Boost.

Experian Boost is a free service that gives you credit for certain monthly bills. The service monitors payments from a surprisingly long list of subscriptions and utilities, including HBO, Netflix, Disney+, Hulu, Verizon, AT&T, Spectrum, among others. To get credited, you have to link whichever bank account or credit card you use to pay for these services. The process takes a few minutes, and you'll see your score boosted in real time. For instance, when I linked Experian Boost to my checking account, my score was boosted by 2 points right away.

For a bill to qualify, you need three payments within the last six months. If you don't have at least three payments, Experian will list the account as "pending" and notify you when you can add it to your credit report.

3. Get a credit-builder loan

Credit-builder loans are like a traditional loan in reverse. You borrow a certain amount of money upfront, which a lender sets aside for you. But instead of receiving that money all at once, you make monthly payments first. These monthly payments are reported to credit bureaus as positive payments. Once you've paid the full balance, plus interest, the money is yours, and you can do whatever with it you wish.

These loans can be great for building credit, but they're not always cheap. They charge interest, like personal loans, which is added to your monthly payment. Sometimes a portion of this interest is returned to you as a dividend, but you'll often end up paying your lender a hefty amount of money to build credit. You might also have to pay an origination fee for the loan.

Don't rule out credit cards just yet

If poor credit is what's stopping you from getting a credit card, you still have options.

For one, you can become an authorized user on someone else's card. The credit card bill won't be your responsibility, but the credit card company will report all activities and on-time payments from that card to the credit bureaus. As long as the primary cardholder makes payments in full and on time, you can build your credit score.

You could also get a credit card for bad credit. Many of these cards are secured, meaning you deposit money upfront to open your account. The deposit becomes your credit limit, which gives your card provider some security, as it can apply it toward your balance if you default. These cards can help you build credit, especially if you use them alongside some of the methods above, like reporting rent payments or enrolling with Experian Boost.