How to Build Credit When You Don’t Have Any

Another strategy for those with little credit history is to apply for one of a new breed of credit card that doesn’t require you to have a credit score, such as Petal or TomoCredit. 

But these card issuers require read-only access to your bank checking account to analyze your spending patterns, bill paying, and income to determine if you’re eligible. 

You will generally need at least six months of banking history, says Kristy Kim, co-founder and CEO of TomoCredit, which launched in 2020. It also weighs your income, account balances, and other factors.

Petal, which launched in 2018, sticks mainly to banking data, including regular income and bill payments, to create a cash score as a measure of overall financial responsibility,

Before you apply, make sure you understand the terms of these cards, including fees (Petal and TomoCredit don’t charge annual fees), interest rates, and rewards. 

Generally speaking, alternative-data cards start you with a low credit limit, from a few hundred dollars to $1,000 or more, though the limits are raised over time. TomoCredit requires new cardholders to make weekly payments by autopay, so you can’t carry a balance. After about three months, your payment period moves to once a month, and cardholders can eventually qualify for limits of $10,000.

Both of these card issuers report your payments to the three major credit bureaus, Experian, Equifax, and TransUnion. 

While alternative-data cards may be good starter options for someone with little or no credit history, be aware that you will be giving up your banking data, which could raise privacy concerns, says Wu of the NCLC. (Both Petal and TomoCredit say they don’t share consumer data with third parties without consent.)