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. 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 to help you understand what you are buying. Be sure to consult with 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.

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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 8 lenders of 2020!
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 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% 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 December 13, 2019, 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 12/13/2019. 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 our student 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 SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.46% APR (with AutoPay) to 7.61% APR (without AutoPay). Variable rates currently from 2.31% APR (with AutoPay) to 7.61% (without AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.31% APR assumes current 1 month LIBOR rate of 2.31% plus 0.75% margin minus 0.25% for AutoPay. If approved for a loan, the fixed or variable interest rate offered will depend on your credit history and the term of the loan 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.

3 Important Disclosures for Figure.

Figure Disclosures

Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.

4 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.

5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.


There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.


For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
For eligible Associates degrees in the healthcare field (see Eligibility & Eligible Loans section below), Lender will refinance up to $50,000 in loans for non-ParentPlus refinance loans. Note, parents who are refinancing loans taken out on behalf of a child who has obtained an associates degrees in an eligible healthcare field are not subject to the $50,000 loan maximum, refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for more information about refinancing ParentPlus loans.


Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).

Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.

All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.

For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.


The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.


The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.


After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.

We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.

We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.

If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.


This information is current as of November 8, 2019 and is subject to change.

6 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.

7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.

8 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.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.

1.99% – 6.89%1Undergrad
& Graduate

Visit Earnest

2.31% – 7.36%2Undergrad
& Graduate

Visit SoFi

2.06% – 6.81%3Undergrad
& Graduate

Visit Figure

2.62% – 6.12%4Undergrad
& Graduate

Visit College Ave

1.99% – 6.65%5Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.06%6Undergrad
& Graduate

Visit Splash

1.85% – 6.13%7Undergrad
& Graduate

Visit CommonBond

1.90% – 8.59%8Undergrad
& Graduate

Visit Lendkey

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.

Published in Credit & Debt,