The Fastest Way To Build Credit Without a Credit Card

Wallet with credit cards the fastest way to build credit

The Fastest Way To Build Credit Without a Credit Card

Getting your first credit card can feel like an impossible task. In order to get one, you need good credit. In order to have good credit, you need a credit card. Or so it may seem. In reality, there are plenty of ways to develop good credit without a credit card. The fastest way to build credit is by showing that you can handle debt in an efficient and responsible manner. Taking out a small loan is one of the fastest ways to build credit.

Bicycle riding team going fast


Read on to learn all about how to get a small loan for building credit.

Credit Building Loans

Loans come in all shapes and sizes. Some require good to excellent credit to even come under considered. For these types of loans, like mortgages, it’s best to shy away from them.

Instead, go out and seek credit builder loans. These are loans often offered by community banks and credit unions with the intent of building credit.

Many financial institutions recognize that building good credit is difficult. As a result, banks and credit unions commit themselves to offering the fastest way to build credit for their members.

These type of loans approved for small amounts you can generally pay off in a couple of different ways. If it’s small enough, you can pay it off up front within the first month. Otherwise, the lender will provide some kind of monthly payment plan for you to follow.

Interest will be applied for multi-month payments.

Be sure you know up front what the terms of the loan are. Making mistakes like not meeting the monthly payment requirements, this can all negatively impact your credit history. It’s important to start off on the right foot when building good credit.

Lender with piggy bank in hands


Other Loans

You can find some loans that may be out of reach if someone is willing to help.

Many lenders will allow you to cosign on a loan. In this case, someone else enters into the loan along with you. If you fail to pay off the loan, the lender will turn to the cosigner.

If you work on paying off these loans, these payments will start to build your credit history. In this way, you can use the safety net of your cosigner to get access to bigger loans that may have been off the table by yourself.

Your cosigner may also benefit from the experience. Cosigning on a loan will often improve their credit as long as payments are made in a timely fashion.

Once again, be sure to understand all the details of these loans. Starting with the bad credit history can make it difficult to get a good credit score later on.

cosigner on credit


The Fastest Way To Build Credit

It doesn’t have to be impossible to build good credit. The fastest way to build credit is by demonstrating you are financially responsible.

Taking out a manageable loan is an easy and accessible way to prove yourself.

For more financial guidance on building or improving your credit, feel free to check out the rest of the blog.

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  1. When I was building my credit, I used the credit builder loans. Many of them were small amounts, and the bank would do the heavy lifting of making the payments on time as long as I deposited money into my bank account.

    The cosigning option is a little risky for my taste. If you choose the co-sign option, you have to choose someone with a great pattern of good payments. and even then, you want to be careful.

    • Good comments. 

      Credit builder loans are a great way to build your credit when you are first starting out or have run into credit problems and need to rebuild your credit.

      It’s even better when the bank makes the payments for you.  All you have to do is make the money available in your account.

      Yes having a reliable cosigner is most desirable.  If you lose your job and can’t make the payments you certainly want a trustworthy backstop that’s going make the payments on time.  

      There are other down sides to using cosigners, as lenders may not be as comfortable with the risk if all of your prior loans were approved using a cosigner.  You want to build credit based on your own merits.

      So the fastest way to build credit, in my opinion is through a great builder loan. 


  2. Thank you for sharing this I’m just starting off building my credit.

    I was young and naive when I first got a credit card so my score took a little hit.

    I’ve been looking for ways to build my credit up without having to open a new card.

    I’m gonna check with a local credit union and see if they can help.

    • No problem,

      It’s a great idea to visit your local credit union to seek advice about your credit.  They are member focused, and more inclined to be in tune with your needs, rather then trying to sell you something.

      A credit union is a great place to start for a credit builder loan. Credit builder loans are a fast way to build credit without a credit card. You can still use one even if you have a credit card.

      Also, don’t be afraid to open another credit card account if you’re able. Just don’t over use your credit and keep your credit utilization rate below 30%.

      Having one card with a $2000 balance and a limit of $4000 and another card with a $0 balance and limit of $2000 can improve your utilization rate and help improve your credit score.

      Best of Luck. 

  3. Hi Patrick,

    Thanks for sharing this post on building credit.

    I naturally assumed that you needed a credit card in order to make this happen.

    So if I’m reading this correctly, it sounds like you just need to be able to prove that you can take out a loan and pay it back on time to improve your rating?

    That is really handy info to know!



    • You have it correctly.

      One of the fastest ways to build credit without a credit card is to go out to your local community bank or credit union and ask them about credit builder loans.

      Credit builder loans aren’t very large, but they are a way to apply sustainable payments toward a loan to help you build/rebuild credit rating.

      These financial institutions report your payment activity to the credit reporting agencies which in turn it helps to build your credit score over time. 

      One caveat, be sure to make all of your payments on time or it completely defeats the purpose.

      Thanks for you comment.

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