6 Accounts That Help Build Credit and 6 That Don’t

Quick Answer

You can build credit with credit cards, installment loans, lines of credit, credit-builder loans, authorized-user accounts and car leases. In contrast, payday loans, cash advance apps, checking accounts, prepaid debit cards and many utility accounts and BNPL loans won't help.

Woman sitting outside holding credit card and phone

6 Accounts That Can Help You Build Credit

In general, most types of debt can be used to build credit, but here's a quick breakdown of specific types of accounts that can help you achieve your goal.

1. Credit Cards

A credit card is one of the most effective tools for building credit. Most credit cards—both secured and unsecured—report your balance and payment activity to all three major credit bureaus each month: Experian, TransUnion and Equifax. Some cards may only report to one or two bureaus, so it's worth confirming with the card issuer before you apply.

To build credit with a credit card, use it regularly and pay your bill on time every month. Keeping your credit utilization rate—the percentage of your available credit limit you're using—low is also important. Finally, paying your balance in full each month allows you to avoid interest charges entirely.

Learn more: An Essential Guide to Your First Credit Card

2. Installment Loans

An installment loan provides a lump sum of money that you repay in fixed monthly payments over a set term. These loans are reported to the credit bureaus, and consistent on-time payments can build your credit history over time.

Common types of installment loans that can help you build credit include:

If you're considering an installment loan, borrow only what you need and make every payment on time to get the most credit-building benefit.

3. Lines of Credit

A line of credit is a form of revolving credit, similar to a credit card. During the draw period, you can borrow up to your credit limit, repay the balance and borrow again as needed. Once the repayment period begins, you pay down the remaining balance in fixed installments.

Whether you have a personal line of credit or a home equity line of credit (HELOC), keeping the account in good standing and making on-time payments can help build your credit.

4. Credit-Builder Loans

A credit-builder loan is designed specifically for people who are new to credit or are rebuilding after financial setbacks. Instead of receiving loan funds upfront, the lender sets the money aside in a savings account or certificate of deposit. You make monthly payments for a fixed term, and the lender disburses the funds to you once you've finished paying.

Most credit-builder loans are available through credit unions, community banks and online lenders. Make sure the lender reports your payments to all three credit bureaus, and make all your payments on time for the most benefit

Learn more: Ways to Build Credit if You Have No Credit History

5. Authorized-User Accounts

If you can't get approved for a credit card on your own, becoming an authorized user on someone else's account is a way to build credit without taking on debt. Once the primary cardholder adds you, the account's history is added to your credit report.

If the primary cardholder has used the account responsibly—maintaining a low credit utilization rate and making consistent on-time payments—it can strengthen your credit profile. You can also use the card for purchases, though you won't be legally responsible for paying the bill.

6. Auto Leases

Leasing a car can build credit in much the same way as taking out an auto loan. A vehicle lease is treated as an installment loan and is typically reported to the credit bureaus. As long as your leasing company reports to all three bureaus and you make your payments on time, the account can help establish positive credit history.

Positive payment history from a car lease can remain on your credit reports for up to 10 years after the lease ends. Missing a payment, however, can be just as damaging as a missed loan payment.

Learn more: Does Leasing a Car Build Credit?

6 Accounts That Don't Help Build Credit

While some of these accounts may have other uses, you typically can't use them to establish and maintain a good credit history.

1. Payday Loans

Payday loans are among the most expensive forms of credit, with loans commonly charging an annual percentage rate (APR) of 400% or higher.

Despite the high cost, payday lenders typically don't report to the credit bureaus, so these loans don't help you build credit. If you fall behind, though, the debt may be sent to collections, which can appear on your credit report and damage your score. If you need a small-dollar loan, consider payday loan alternatives such as a personal loan for bad credit.

2. Cash Advance Apps

Cash advance apps let you access a small portion of your next paycheck early, often with low fees or optional tips. They can be a lower-cost alternative to payday loans in a pinch, but these apps typically don't report your payments to the credit bureaus. Using them responsibly is fine for cash flow, but it won't help you build credit.

3. Most Checking Accounts

Your checking account is essential for day-to-day money management, but regular transactions—including debit card purchases, bill payments and direct deposits—don't appear on your credit report. Deposit accounts in general won't help you build credit, including:

Certain checking accounts may help pave the way to building credit, however. The Experian Smart Money^™ Digital Checking Account & Debit Card can help you build credit without debt by linking to Experian Boost^®^ø^®^ø, which gives you credit for eligible bill payments after three months of payments. See terms at experian.com/legal.

4. Prepaid Debit Cards

A prepaid debit card lets you spend only what you load onto the card. There's no credit line and no debt involved, so there's nothing for lenders to report.

Prepaid cards can be a useful budgeting tool, but they won't help you build credit. If you're looking for something similar that does build credit, a secured credit card may be a better fit.

5. Utility Accounts in Some Cases

Utility providers may run a soft credit check when you open an account, but that won't affect your score. In most cases, your on-time utility, cellphone and similar payments aren't reported to the credit bureaus, so paying those bills won't automatically build credit.

That said, you can still get credit for utility payments, even if your providers don't report them. Experian Boost is a valuable feature that allows you to add eligible utility, rent, phone, insurance and streaming subscription payments to your Experian credit report. You can sign up and link the accounts you use to pay bills, and qualifying on-time payments can be added to your Experian credit file, potentially raising your FICO^® Score^☉ ^Θ powered by Experian data instantly.

6. Buy Now, Pay Later Loans in Some Cases

Buy now, pay later (BNPL) services let you split purchases into short-term installments, often with no interest charges or fees. Most BNPL plans don't report on-time payments to the credit bureaus, so they typically won't help you build credit.

But reporting policies vary by provider and are changing fast. Here are just a few examples:

Affirm: In 2025, for instance, Affirm began reporting all BNPL transactions to Experian and TransUnion. However, the company noted that the data won't impact your credit score, and there's no indication of when that will change.
Klarna: Klarna began reporting loan activity for its long-term loans to TransUnion, but not its pay-in-4 plans. What's more, the data is only visible to you and doesn't help your credit score.
Afterpay: Afterpay has stated that it won't report any BNPL payments to the credit bureaus until it sees proof that on-time BNPL payments will help borrowers' credit scores.

Regardless of the provider, missed payments can still end up in collections, which will hurt your score.

How Long Does It Take to Build Credit?

Building credit takes time. To generate a FICO^® Score, you generally need at least one credit account that has been open for six months or more, with activity reported to the bureaus. With VantageScore^® , you can get a credit score as soon as your first account is reported to the credit bureaus. In both cases, adding more accounts over time helps round out your credit profile.

That said, establishing a solid credit history typically takes several years. Be cautious of any service promising to build your credit quickly: These are often scams. To get started on the right foot, consider signing up for Experian Go^™, which provides tools and guidance to help you build credit from scratch, and gives you free access to your Experian credit report and FICO^® Score once you start building credit.

Frequently Asked Questions

Does Klarna Build Credit?

No. Klarna's popular pay-in-4 option doesn't report on-time payments to the credit bureaus, so using it responsibly won't help build your credit history. Klarna does share term loan data with TransUnion, but that data is only visible to you on your own credit file—it isn't factored into your credit score or visible to lenders.

If you miss a payment and the debt goes to collections, though, that collection account can be reported to the bureaus and hurt your score.

Does Leasing a Car Build Credit?

Yes, in most cases. A vehicle lease is treated as an installment loan and is typically reported to the credit bureaus by the dealership or leasing company. Making on-time monthly payments can build a positive payment history just like an auto loan would.

How Can I Build Credit at 18?

Starting to build credit at 18 is one of the best financial moves you can make. Here are a few approaches that work well for young adults:

Become an authorized user on a parent's or family member's credit card.
Apply for a secured credit card, which requires a deposit that typically becomes your credit limit.
Open a credit-builder loan through a credit union or online lender.
Apply for a student credit card if you're enrolled in college.
Sign up for Experian Go^™ to establish your credit file and track your progress.

No matter which path you choose, developing and practicing good credit habits is what actually builds your score.

How Can I Build Credit Without a Credit Card?

You don't need a credit card to build credit. Several options can help, including the following:

Take out a credit-builder loan through a credit union, community bank or online lender.
Become an authorized user on a trusted family member's account.
Take out a federal student loan and make on-time payments during repayment.
Use Experian Boost to add eligible rent, utility, phone, insurance and streaming payments to your Experian credit report.
Finance a vehicle through a loan or lease and make every payment on time.

A mix of account types can also strengthen your credit profile over time, since credit mix is one factor in your score.

Are There Debit Cards That Build Credit?

Traditional debit cards don't build credit. Because a standard debit card draws directly from your checking account, there's no borrowing involved and nothing to report to the credit bureaus.

However, a few specialized products work differently. The Experian Smart Money^™ Digital Checking Account & Debit Card can help you build credit without debt by linking to Experian Boost, which gives you credit for eligible bill payments after three months of payments. You'll also pay no monthly fees^¶ and have access to more than 55,000 fee-free ATMs worldwide^**. See terms at experian.com/legal.

The Bottom Line

Building credit is a long game, but knowing which accounts count is the first step. Focus on accounts that report to the credit bureaus, make every payment on time and keep your balances manageable.

While you're working on your credit, consider using Experian's free credit monitoring service to track your progress. You'll get access to your Experian credit report and FICO^® Score, along with real-time alerts when changes are made to your credit file and insights into how you can improve your score.

How Good Is Your Credit Score?

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6 Accounts That Help Build Credit and 6 That Don’t

In this article:

6 Accounts That Can Help You Build Credit

1. Credit Cards

2. Installment Loans

3. Lines of Credit

4. Credit-Builder Loans

5. Authorized-User Accounts

6. Auto Leases

6 Accounts That Don't Help Build Credit

1. Payday Loans

2. Cash Advance Apps

3. Most Checking Accounts

4. Prepaid Debit Cards

5. Utility Accounts in Some Cases

6. Buy Now, Pay Later Loans in Some Cases

How Long Does It Take to Build Credit?

Frequently Asked Questions

Does Klarna Build Credit?

Does Leasing a Car Build Credit?

How Can I Build Credit at 18?

How Can I Build Credit Without a Credit Card?

Are There Debit Cards That Build Credit?

The Bottom Line

Instantly raise your FICO^® Score for free

How Good Is Your Credit Score?

Resources

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In this article:

6 Accounts That Can Help You Build Credit

1. Credit Cards

2. Installment Loans

3. Lines of Credit

4. Credit-Builder Loans

5. Authorized-User Accounts

6. Auto Leases

6 Accounts That Don't Help Build Credit

1. Payday Loans

2. Cash Advance Apps

3. Most Checking Accounts

4. Prepaid Debit Cards

5. Utility Accounts in Some Cases

6. Buy Now, Pay Later Loans in Some Cases

How Long Does It Take to Build Credit?

Frequently Asked Questions

Does Klarna Build Credit?

Does Leasing a Car Build Credit?

How Can I Build Credit at 18?

How Can I Build Credit Without a Credit Card?

Are There Debit Cards That Build Credit?

The Bottom Line

Instantly raise your FICO® Score for free

How Good Is Your Credit Score?

Resources

Latest Research

Latest Reviews

Instantly raise your FICO^® Score for free