3 Best Ways to Build Credit Without Credit Cards

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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You know it’s important to build credit and keep a good credit score.

But what if you don’t have any credit at all? How are you supposed to build a good credit score if you don’t have any credit, to begin with?

Some people suggest taking out a credit card with a small credit limit, using it for everyday purchases, and immediately paying off the balance to build credit.

That’s fine if you can get approved for a card, and feel comfortable using credit this way.

However, maybe you don’t qualify for a credit card, or simply want to explore other options. Here are three new tools that may provide the best ways to build credit for you.

1. Self Lender

What if you could build credit while also putting money into a savings account?

Self Lender is a service that allows you to do just that by offering credit builder loans.

Save your way to better credit

A financial institution lends you a sum of money. That money is held in an FDIC-insured certificate of deposit (CD) account for 12 months.

This means it’s placed into a savings account right away — you don’t get a lump sum of money.

Throughout the next 12 months, you make monthly payments to repay your loan. As you make your payments, Self Lender reports that to credit bureaus. This allows you to build a positive credit history if you make all your payments on time.

At the end of the 12 month period, you’ll have a paid off loan and a CD savings account with the full balance. Plus, interest your balance earned at a rate of 0.10% APY for the year. That’s why this method is one of the best ways to build credit.

Self Lender is free to join, but you pay $12.00 to open the CD. And the loan comes with an interest rate just like any other. Specifically, that’s 12.52% APR on these loans.

While these loans themselves aren’t new, the way Self Lender is making this way of building credit widely available is. They’ve put the process 100 percent online and made it self-serve. In addition, you get free credit monitoring with real-time credit alerts.

“Credit unions are great institutions, but not everyone has easy access to visit a credit union,” explains James Garvey, Self Lender founder and CEO. He also mentions that while not all financial institutions have big barriers to entry, some do put more of a burden on consumers.

Ways to build credit through loans

In order to get a credit builder loan, you may need to make an initial cash deposit of $500.00 or more. The institution will then lend you that same amount because it’s backed by your deposit.

Self Lender offers the same credit builder loan but makes the tool much more accessible than it traditionally has been.

“As a consumer, the burden of the cash deposit is pretty tough,” says Garvey. “This is why we created Self Lender: to make it easy to join a savings plan that builds credit.”

So why are credit builder loans with Self Lender one of the best ways to build credit? For one, this type of loan is a safe, responsible product.

“With a credit builder loan, you get a loan that you can’t immediately spend because it’s locked into a brand new, FDIC-insured bank account in your name,” says Garvey.

“It’s almost like a savings plan that builds credit because as you make monthly payments to pay down the loan, your CD accrues interest,” Garvey explains. “The payments are reported to all three credit bureaus which can help you build credit.”

“Finally, at the end of the term, you’ve paid off the loan, and the CD unlocks,” Garvey adds. “You’ve established credit history while forcing yourself to save. How cool is that?”

Garvey adds that credit reports track two main types of credit: revolving lines of credit, like credit cards, and installment loans, like a mortgage or student loan.

Credit builder loans are considered installment loans. That can help people who already have a credit card and don’t want to try to build their history with another.

Having a mix of these two types helps boost your score, as it shows you can manage various lines of credit.

2. Rental Kharma

Many people believe that you build credit when you’re a renter.

You send in your rent check, on time and in full, every month. That means your credit score is going up, right?

Not necessarily. Landlords and property management companies aren’t required to report tenant payments to credit bureaus. Therefore, it’s not one of the automatically guaranteed ways to build credit.

When you’re renting a home, you can build a great history with your landlord. This is valuable in case you move and need a referral on your new rental application. But it doesn’t do anything for your credit history or score if no one reports your payment history.

Thankfully, there’s a solution for that.

Enter Rental Kharma. It’s a service that provides renters with a way to build credit even if their landlord doesn’t report payment activity to a credit bureau.

For a $25.00 setup fee and a monthly service fee of $7.00, renters can have their payments reported to TransUnion to help them build a credit history — and a good score.

Rental Kharma can also backdate past rent payments up to two years for an additional fee.

Cullen Canazares, CEO of Rental Kharma, founded the service after he sold a home and went back to renting. When he stopped paying a mortgage and lost the credit reporting on the loan, he saw his credit score drop.

Canazares’s experience and the problem he wanted to solve are reflected in the company’s tagline: “Good renters deserve good credit.”

Building credit through renting

While reporting your payment activity and history on various bills isn’t their only service offered, Rental Kharma is one of the best ways to build credit because of a few unique features.

“We can compress time through our Rental Kharma look back,” explains Bill Butler, Rental Kharma’s COO. “This allows us to verify up to two years of past payments the day you enroll, and report up to 24 months of payment history onto your credit report.”

“This can lead to significant credit improvement in only a matter of weeks versus [the 6 or more month wait] with other products,” Butler adds.

Butler says other products for credit building — like credit cards — can only go into the future. To build up a history, you need to use the product for an extended period of time before you’re likely to see your credit score change.

“For consumers who want to achieve a certain economic goal quickly, like buying a home, the ability to backdate past payments is a complete game-changer over having to wait 200 days,” says Butler.

Rental Kharma also prides itself on offering a straightforward signup process.

“If you compare us to other credit building products,you will see we don’t require lengthy contracts, confusing terms, and the general headache of going through a bunch of contracts,” explains Butler. “We’re really focused on making credit building insanely easy and simple.”

3. Peer to peer lending

Peer to peer lending isn’t extremely new. However, it’s only become mainstream in the last few years.

Peer to peer lending, or P2P, allows you to access a digital marketplace where you can take out a loan not from a traditional lender, like a bank or credit union, but from another individual.

Borrowing money isn’t always one of the best ways to build credit. But, it can provide a good option in some situations. If you already planned to make a purchase that you wanted to finance, it’s worth exploring.

Peer to peer loans often come with lower interest rates than credit cards. Thus, it could be a cheaper way to borrow funds.

Just watch out for other fees associated with loans, like origination fees. Those additional costs could make the loan more expensive than a credit card in the long run.

Start building your own credit today

While credit can hurt you financially if you don’t use it responsibly, a strong history and score can help you save money when you need financing.

A great credit history can also help you get approved for various financial products. Even things like the apartment you want to rent.

And you don’t need to dabble with credit cards. There are so many other good ways to build credit without worrying about getting a card or racking up debt.

Tools like Self Lender, Rental Kharma, and even peer to peer loans can help build credit in a way that’s responsible and good for your financial well-being.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.899% APR to 8.179% APR (with AutoPay). Variable rates from 2.570% APR to 6.980% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. SoFi rate ranges are current as of September 14, 2018 and are subject to change without notice. See APR examples and terms. Lowest variable rate of 2.570% APR assumes the current index rate derived from the 1-month LIBOR of 2.08% plus 0.740% margin minus 0.25% AutoPay discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.57%-8.17% (2.57%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Estimated average savings amount is based on 14,659 Education Refinance Loan customers who saved on loans between August 1, 2017 and July 31, 2018. The calculation is derived by averaging monthly savings across Education Refinance Loan customers whose payment amounts decreased after refinancing, calculated by taking the monthly payment prior to refinancing minus the monthly payment after refinancing. We excluded monthly savings from customers that exceeded $4,375 and were lower than $20 to minimize risk of data error skewing the savings amounts. Savings will vary based on interest rates, balances and remaining repayment term of loans to be refinanced. Borrower’s overall repayment amount may be higher than the loans they are refinancing even if monthly payments are lower.

2.57% – 6.98%3Undergrad
& Graduate
Visit SoFi
2.47% – 5.87%1Undergrad
& Graduate
Visit Earnest
2.47% – 8.03%4Undergrad
& Graduate
Visit Lendkey
2.80% – 6.22%2Undergrad
& Graduate
Visit Laurel Road
2.48% – 6.25%5Undergrad
& Graduate
Visit CommonBond
2.57% – 8.17%6Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.