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How I Got into the 800 Club with No Loans

Loans are a solid way to build credit but they definitely aren’t the only way.

Over the past decade, I built a credit score of 816 without ever taking out a single loan; I only used credit cards.

1. You might need help to start building credit

The Credit Card Act of 2009 makes it difficult for college students to take out a credit card on their own. I was in college earlier than that, but I didn’t have to qualify on my own. Fortunately, my dad was willing to help me out by adding me as an authorized user on his account. I received a credit card with my own name on it. I didn’t use the card but I got the benefit of his responsible credit behavior in my own credit file. My score started to build.

For young people aged 18 to 21 who don’t have a family member willing to add them as an authorized user but who can show proof of income, student credit cards and secured credit cards are great options.

Student credit cards are designed to help young people learn how to use credit.

Secured credit cards require a cash deposit to open the account and that deposit is used as collateral. In both cases, you can use the card like any other credit card, and you need to make at least the minimum payment (on-time) every month if you charge anything.

2. Start building your own credit (carefully)


After about 6 months of being an authorized user on my dad’s card, I started looking at credit card offers. I wanted something for myself.  I was approved for a basic card from a major bank that offers credit cards.

I heard of people getting into credit card trouble so I was very cautious. I rarely used my card and paid the balance off every single month. These two habits were enough to build a strong credit score.

When I graduated college, my score was over 700 even though I had never taken out a loan.

Find out your credit score for free today on Credit Sesame.

3. Face setbacks head-on


Credit card debt

I struggled to get a steady job after graduation, and made some unwise purchases like an extra vacation (all on credit). I did continue to make my payments on time every month.

Facing $5,000 in credit card debt, I needed a plan to protect my score until I could get my finances in order.

I saw that about $50 a month was just going to interest – a total waste. Since I still had a good credit score, I applied for a 0% balance transfer card. With that, I was able to avoid interest charges for 15 months. The money I saved went towards paying off my debt.

4. Protect your score


Even though money was tight, I always made my monthly minimum credit card payment. Payment history is the single most important factor affecting your credit score.

Adding the balance transfer credit card helped my credit score by increasing my available credit.  At the time, my total credit limit was $15,400, so $5,000 of debt equated to a credit utilization rate of 32%. My new card added $13,000 to my available credit and brought my utilization rate down to 18%. Utilization is the second most important factor affecting your credit score.

Eventually my financial situation turned around and I paid off all my debt.

Today my score is 816.

Get a free credit report card and find out what’s holding your score back.

Excellent credit and no loans

Account mix

The absence of loans probably keeps me from achieving a perfect 850 credit score, but that’s fine with me. I live in New York City and never drive so I don’t need a car loan. I also don’t plan on buying a house any time soon. Maybe one day I’ll take a loan if I need one, but that isn’t a requirement for excellent credit.

The examples above relate to the author’s experience and are for the purpose of example only.

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Published July 14, 2017
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