How to improve your credit score without a credit card

A study by HSBC found that 1 in 4 adults in the UK don't understand how credit scores are calculated, and more than a third of adults (36%) didn't even know their own credit score, let alone how to improve a credit score without credit card usage.

While a credit card can help increase your credit score if you use it and pay it off responsibly, because it demonstrates your ability to manage debt and meet payments, there are other ways.

Can you build credit without a credit card?

Yes, you can have a credit score and take steps to improve it without a credit card. It comes down to how you manage your overall credit health.

Using a credit card can help if you're borrowing responsibly and always making repayments on time, as you're building a reliable track record for lenders.

That said, you don't need a credit card to positively influence your number. Let’s look at several areas you could explore. 

Use a credit-builder loan

In the UK, many credit-builder loans are disguised paid products that create a reportable repayment line rather than giving you spendable borrowing. Instead, you agree an amount with a lender and they 'loan' you this total amount upfront, but instead of giving you cash, they lock it away as a digital savings voucher. Loqbox is an example.

As you pay off the 'loan' in monthly instalments, they report your on-time payments to the major CRAs, which can help improve your credit score.

That said, the FCA reported that many standalone credit-builder products don't significantly improve scores for most consumers, and it's important to remember that a missed payment will negatively affect your credit score.

A credit builder is best used in combination with other credit score tactics.

Report your rent payments

Rent reporting is a process that submits your monthly rental payments to CRAs to show you can reliably meet payments.

Some providers include CreditLadder and Canopy. Because rent isn't automatically reported like debt, this allows you to show that you can commit to paying regular payments on time every month.

Report utility and mobile phone payments

If you have a mobile phone contract, it will appear on your credit file and making regular, on-time payments will help your credit score.

It's not as common for utility bills to appear on your credit file, as they're not financed agreements. But it’s important to monitor your report to see what’s reported. 

Register on the Electoral Roll

It’s worth getting on the Electoral Roll even if you don’t intend on voting.

Being registered and keeping your address details up to date helps lenders verify your details when you make an application. Remember to update your info if you change address, because a mismatch between your Electoral Roll data and what you include on an application can result in you being declined credit. 

Pay all bills on time

This is essential to building your credit score. On-time payments help show reliability, while a single late payment can remain on file for 6 years, even though its impact fades over time. 

It may be worth considering setting up Direct Debits to help make sure a payment doesn’t slip through the net. 

How long does it take to improve your credit score?

Improving your credit score without using a credit card involves a combination of tactics that nurtures your overall credit health rather than simply borrowing money and repaying it. 

Whether you use a card or not, there's no set time that it takes to improve your credit score. But building positive habits today is worth it in the long run. And the first step to growing is knowing – see exactly where you stand with your most detailed credit report.