The Credit Guy

Building a credit history without credit cards


Living without credit cards can lead to a ‘thin’ credit file in which lenders don’t see enough evidence that you are a good credit risk.

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Dear Credit Guy,

I have never had a credit card. What does that say about my credit history? — Peaches

Dear Peaches,

Wow! If you are over the age of 18, you are definitely in the minority of people living in the United States. The average American household has more than $9,000 in credit card debt and pays more than $1,300 a year in interest on that debt.

The only way to know for sure what information has been gathered about you in the credit world is to get copies of your credit report from all three major credit bureaus. You are entitled to one free copy of your credit report from each bureau once a year. You can obtain your free copies at You might also want to purchase your credit score from to review what lenders or other interested parties are seeing when they check your credit history. Your FICO credit score is based on the information contained in your credit reports from the three major bureaus.

Once you have copies of your credit reports in front of you, review the information for any errors. Make sure the accounts that are listed belong to you and that they are reported correctly. If you find information that does not belong to you or that is in error, file a dispute with the bureau that reported it. You can dispute information online at the bureaus’ websites.

Your credit history will reflect how you have used credit through the years, including installment loans such as a mortgage or car loan and revolving credit accounts (such as credit cards or lines of credit, which you don’t have). Negative items will remain on your credit report generally for seven years — some items remain for 10 years. Positive information will stay on your report as long as the account is open and for 10 years after the account is closed.

Your keys to getting into the 700-plus credit score club

Having a solid credit history with a credit score over 700 will open doors to money-saving opportunities — from low-interest mortgages and loans to lower APR credit cards, better insurance rates and even jobs. Here are a slew of tips that can help get you and keep you in the get and keep a great credit score.

So, if you have used other types of credit besides credit cards and have paid your accounts as agreed, your credit history should be fairly good. The fact that you do not have any credit card accounts will hurt your credit score slightly because 10 percent of your FICO credit score is based on the types of credit used. You will not receive all the points for this category because you lack any revolving accounts. This isn’t necessarily a bad thing, and you shouldn’t go out and apply for a bunch of credit cards to try and receive the credit scoring points.

If you do not currently have or have never had any other credit accounts such as a car loan, student loan or mortgage, you will be considered what is referred to in the credit industry as having a “thin” credit file. What this means is because you have not used any typical credit products, you will not have enough information in your credit reports to generate a credit score. Therefore, lenders have no previous history to review to decide what risk you would present to them if lending to you.

You will need to begin to build your credit history if you do find yourself in the “thin” credit file category. The idea is to establish accounts in each of the different types of credit: installment and revolving. You might start with an installment loan that is guaranteed by a savings account, and a retail store credit card. Both of these types of credit are typically easy to obtain. You will want to be sure to pay on time and as agreed.

It takes time to build a credit history, but it is well worth the effort because in our society lenders are not the only entities that review a person’s credit. Landlords, employers and insurance companies also base decisions on a person’s credit history.

If you need to obtain credit in the meantime, you can request that the lender review an Expansion score from FICO or the VantageScore, which will calculate your credit score based on other things such as your bill payment history with utilities, landlords and other sources.

Take care of your credit!

See related: Consumers, credit bureaus, grapple with thin file problem, What to do if you have no credit history

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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