In 2023, there are approximately 28 million Americans who are considered credit invisible, meaning they have no credit history at all.
When you have an insufficient credit history, many adult things will be challenging. You may be unable to buy a car or get a mortgage for a house.
When a lender makes a hard inquiry for your credit score, nothing will be there to show you are a trustworthy and responsible borrower.
If you have no credit history and need one, there are several things you can do to help create a credit history for yourself. Read on to learn more.
What Does Insufficient Credit Mean?
When you consider the history of women and credit, it wasn’t until 1974 that women could obtain their own credit cards. This impacted women because without establishing their credit history, they could never be independent of men.
Anyone with insufficient credit can be denied a loan because they can’t prove they will be responsible for paying the money back.
It’s worth noting that no credit is easier to fix than bad credit. If you are irresponsible with your debt and build a poor credit score, repairing and rebuilding can take significant time.
Building Credit
The good news is that it isn’t hard to do if you haven’t established a credit score yet. You can do several small things to develop a credit history for yourself.
Become an Authorized User
One way to build a credit score is to become an authorized user on someone else’s credit card.
You can use their credit card and piggyback on their credit score. This means that the actions of the primary user can establish credit for you.
Utility and Cell Phone Bills
One option through Experian allows you to connect your utility and cell phone bills to your bank account.
You make direct payments from your bank account, documented through the Experian Boost program.
Credit Builder Loan
One of the biggest parts of a credit score comes from payment history. 35% of a credit score is based on how well a person pays back debt.
One way to build your credit is through a credit builder loan. Essentially, the lender deposits your loan amount into an account you can’t access until the loan is paid off.
You make payments on the loan to establish credit and get access to the funds once the loan is paid off.
Beginner Credit Cards
Several types of credit cards can help to establish a credit history.
A student credit card is one where the credit line is low, and the lender knows you’re likely a user with no credit background.
Another type of credit card is a secured card. This type of credit card often comes with a low credit limit. The borrower essentially deposits money to the card, which then becomes the credit line for the card.
What to Do When You Have an Insufficient Credit History
If you have an insufficient credit history, there’s no reason to despair if you need credit. You can establish a credit history in just a few months using one or more of these strategies.
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