Credit Invisibles: How to Build Your Credit Profile

Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. There are many people who don’t understand credit. While letting something like credit card debt get out of control can be damaging to one’s personal finances, it’s important to obtain and maintain a solid credit profile. It has implications for your personal finances and ability to start a business if you have entrepreneurial aspirations. The following contributed is entitled, Credit Invisibles: How to Build Your Credit Profile.

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Many individuals are “credit invisible.” This means that they don’t have enough relevant information in their credit reports to produce a credit score. If you find yourself falling to be in this category, it can be impossible to apply for loans or credit cards, get a mortgage, or even land a job. Here are some proven ways to build your credit profile and establish a history.

Make use of alternative data

Credit scores are usually generated based on comprehensive repayment histories or credit reports. If you lack these, it’s possible to generate a score based on alternative data and supplemental information like utility, cellphone, and rent bill payments. Even without a history of repaying home, student, or auto loans, you’ll now be granted access to a credit score through alternative data credit scoring. It also works if you have a credit score that has been previously damaged. This kind of data will be able to produce a credit assessment that is highly predictive and unlike traditional credit scores.

Affiliate yourself with a community bank or credit union

Join a local credit union and take out a small signature loan or credit-builder loan. With these kinds of loans, the local bank or credit union will first place your loan money into an interest-bearing savings account which you’ll make payments to. Your payments and activity will get reported to the credit bureaus. Once you’ve fully repaid the loan, you’ll be able to receive the money and you’ll have built up an adequate repayment history.

Add yourself to an existing credit card account

Seek the help of a family member or loved one who possesses a long-established, positive credit history. Ask if they can add you to their credit card account as an authorized user. The older their credit card, the better since the information that dates back to when the card was first opened is included on the user’s credit file. Once you become an authorised user, you’ll be issued a card, but you won’t need it to make a credit history. This card is directly linked to the primary cardholder, and they’ll be responsible for the charges made on it. It’s best not to use it at all so that you can avoid getting into any conflict with them. Check your credit score when you’ve had it for several months. If your credit score is at 670 to 740, then you can apply for your own card.

Make a request for a secured credit card

Applying for a secured credit card doesn’t require a credit score, but it does require you to put down a refundable deposit which will serve as your credit line. This means you’ll be borrowing against your own money. If you’re unable to cover payments, the lender will take money from your deposit in order to repay it. Make sure to use the card sensibly by only charging small items on it that you can afford to repay in full by the due date. This will allow you to build a positive credit history in just a couple of months.

Besides paying your bills on time and applying for high-interest, short-term loans or cards, these simple methods will help you go from a non-existent credit score to a great one.

Author: anwaryusef

Anwar Y. Dunbar is a Regulatory Scientist. Being a naturally curious person, he is also a student of all things. He earned his Ph.D. in Pharmacology from the University of Michigan and his Bachelor’s Degree in General Biology from Johnson C. Smith University (JCSU). Prior to starting the Big Words Blog Site, Anwar published and contributed to numerous research articles in competitive scientific journals reporting on his research from graduate school and postdoctoral years. After falling in love with writing, he contributed to the now defunct Examiner.com, and the Edvocate where he regularly wrote about: Education-related stories/topics, Science, Technology, Engineering and Mathematics (STEM), Financial Literacy; as well as conducted interviews with notable individuals such as actor and author Hill Harper. Having many influences, one of his most notable heroes is author, intellectual and speaker, Malcolm Gladwell, author of books including Outliers and David and Goliath. Anwar has his hands in many, many activities. In addition to writing, Anwar actively mentors youth, works to spread awareness of STEM careers, serves on the Board of Directors of the Friends of the David M. Brown Arlington Planetarium, serves as Treasurer for the JCSU Washington, DC Alumni Chapter, and is active in the Dave Ramsey Financial Peace Ministry at the Alfred Street Baptist Church. He also tutors in the subjects of biology, chemistry and physics. Along with his multi-talented older brother Amahl Dunbar (designer of the Big Words logos, inventor and a plethora of other things), Anwar is a “Fanboy” and really enjoys Science-Fiction and Superhero movies including but not restricted to Captain America Civil War, Batman vs. Superman: Dawn of Justice, and Prometheus. He is a proud native of Buffalo, NY.