Can You Build Credit Just by Paying Your Bills?

You can build credit by paying bills, but it depends on which bills you’re paying. Monthly bills like your auto loan, credit cards, or mortgage will automatically build your credit when you make monthly payments on time because these accounts report to each credit reporting agency. In comparison, monthly bills such as utilities, rent, or insurance don’t automatically report your payment history unless you’ve employed alternative credit reporting tools (like Experian BOOST™ or Grow Credit) or have become delinquent on your account(s).

What Is the Fastest Way to Build Credit?

The fastest way to build credit is by employing several strategies including: • Making all bill payments on time • Disputing inaccurate information on your credit report • Paying down revolving debt • Using credit reporting alternatives (Extra, BoomPay, Experian BOOST™) • Improving your credit mix by having installment and revolving credit accounts • Have a trusted friend or family member add you as an authorized user to one of their credit cards. By staying focused on your goals and taking a full-picture approach to your credit situation, you’ll have the fastest and best results in order to build credit.

Can You Build Credit Without Getting Into Debt?

Yes, you can build credit without going into debt with credit cards, but it does take some planning, such as: • Use alternative credit reporting companies • Get a credit builder loan • Get a debit card that builds credit • Use a service that reports your rent payments to the credit bureaus These methods work in conjunction with healthy credit habits such as paying your bills on time, disputing inaccurate information, and keeping the balances on your credit cards low.

How to Build Credit Without a Credit Card

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The Best Methods to Improve Your Score Without Extra Debt

When you’re looking for ways to build your credit, the most prevalent advice you’ll find is to open new credit cards. Opening a new revolving credit line often boosts your credit score but for many people, it can also be a doorway to debt.

It’s possible to build credit without credit cards. It takes a bit more effort, but these little-known methods can help you improve your credit score in no time.

Remember the proven formula for building credit: get 3 revolving credit accounts, 1 installment loan, make all payments on time, and keep your credit utilization at 10% or below.

With that, let’s dive in!

1. Use a Debit Card that Builds Credit

A common misconception is that choosing the credit option when making a purchase on your debit card builds credit. While that is a credit myth, it may have inspired the creation of a recent financial product that allows you to build credit history with a debit card.

However, there are several debit cards that build credit and each one integrates with your existing checking accounts. These card issuers connect to your bank account and issue a card with a spending limit similar to a credit card.

This tracks your payment activity which the company uses to report to the credit bureaus. Several companies offer this service with monthly pricing that likely costs less than one of your streaming services. The two prominent ones include Extra and Zoro.

Some of these cards even give you rewards for making purchases at certain places. So you get the benefit of an increased credit score plus the possibility of cash back or redeemable rewards points.

2. Get a Credit Builder Loan

A credit builder loan is an excellent way to build credit without accumulating credit card debt. They allow you to save money and build credit at the same time. If you’re not familiar with these financial tools, here’s how they work.

Credit builder loans are installment loans (similar to personal loans) that don’t give you the loan amount right away. Instead, they put the funds in a secured savings account while you make regular monthly payments on the loan.

At the end of your secured loan term, the funds are released to you. Assuming that you made all of your loan payments on time, your credit score should see an increase since the on-time payments are reported to major credit bureaus.

This way, you build your savings and your credit at the same time!

At Digital Honey, we’d recommend getting a credit builder loan from CreditStrong. There are plenty of options to choose from that include Self or MoneyLion. However, CreditStrong offers the security of working with a five-star rated bank.

CreditStrong reports your monthly payments to all three credit reporting agencies, not just one or two. On average, their customers saw an increase of about 70 points within 12 months of on-time payments. Plus instead of going into debt, they’re helping you build savings.

CreditStrong has three options:

Their normal credit builder loan, Instal. It’s an installment loan with the lowest monthly payment (only $15/month.)
Their mega credit builder loan, MAGNUM. It’s for business owners and people who want to qualify for high limit credit cards. (Also an installment loan.)
Their newest product, Revolv. It’s a revolving credit account.

Credit builder loans are a great place to start if you have bad credit, also check out our article, How to Build Credit with Bad Credit, for more information.

3. Report Rent Payments to the Credit Bureaus

Have you ever wondered why your monthly rent payments don’t automatically contribute to your credit score? You’re not the only one. For most people, rent comprises about 30% – 50% of their monthly income, which is a big payment obligati