In having no credit score, you do not have any financial activity for credit bureaus to use to calculate a score. Simply put, you do not have any credit history, never applied for a credit card or other line of credit, or failed to borrow any money. It could also mean you just do not have a recent credit history. If you haven’t had any activity in the last seven to ten years, you’re most likely out of luck.
Credit bureaus — you may know the major ones as Experian, TransUnion, and Equifax — need activity to calculate a credit score, which is also known as your VantageScore or FICO score. However, one in 10 American adults are “credit invisible,” according to the Consumer Financial Protection Bureau. But, you have no credit, your borrowing options are limited.
The good news is no credit isn’t the same as bad credit. Although they both tell credit bureaus’ algorithms that you haven’t proven to be a responsible borrower, no credit tells them that you haven’t proven to be an irresponsible borrower, either. So, if you’re looking to finally build your reputability with credit bureaus, here are a few tips to get you started, courtesy of Haven at Main, the premier apartments near Galleria Houston.
Become an authorized user.
You aren’t required to have a credit card to build a credit score, but it’s one of the surest ways to do it. Ease your way into credit card usage by asking someone you trust to add you as an authorized user on their card. In most cases, activity on that credit card gets reported to their credit history – and now, yours – regardless of how much you actually swipe the card. So, you can benefit from their responsible credit use. Their irresponsible activity could also hurt your credit score, so choose your credit mentor wisely.
Open a store credit card.
The first step to build a positive credit history can be opening a credit card with a popular retailer, like the Lowe’s Advantage Card or the Target REDCard. It can be for a very modest amount of 100 or 200-dollars – whatever you need to get the ball rolling. Using the card and paying it down every month will jumpstart your credit. Plus, store cards tend to have looser requirements, so you have a better chance of being approved than with a traditional card. They also tend to come with lower interest rates and fees!
Pay attention to your student loan debt.
Taking out student loans will earn a credit history, too. Most federal loans do not lend based on your credit score. Everyone is given the same interest rate, and loan amounts are based on need. Although they are better to avoid if you can, student loans can often be consolidated or put on special, income-driven repayment plans. If you have to use student loans to pay for school, use them to your advantage and pay the debt responsibly when it is due and establish a solid credit score in the process.
The team at Haven at Main, the best pet-friendly apartments in Houston, finds it important that our residents lead healthy, well-informed lives. By presenting new ideas in our resident blog, we make it easy to stay up-to-date with the latest information on health, wellness, finances, and more.