Are You Card Invisible? Here Are Ways to Correct It

Financial difficulties, bad economy concept. Negative emotionMillions of Americans don’t have a credit score, and the problem lies with a lack or limited credit history.

In a 2015 study by the Consumer Financial Protection Bureau (CFPB), about 45 million Americans didn’t have a credit score from any of the three credit bureaus. More than 10 percent of the adult population in 2010 was credit invisible since they didn’t have any credit history. Meanwhile, 19 million were deemed un-scorable because of their insufficient or outdated credit data.

Most of the credit invisibles were below 21 years old. Others were from low-income households or were either Hispanics or African Americans. It’s also possible not to build a credit history by avoiding debt or not learning how to use and maximize credit.

Why You Need to Have Credit

These data don’t bode well for many reasons. A good credit history can increase a person’s credit score. It then provides more financing options, from mortgage to auto loans. It gives someone access to utility providers such as phone, electricity, and gas. It’s common for providers to double-check the credit report before they will approve or start the service.

Although there’s the question of ethics, many companies do peek into an applicant’s credit report, which means a poor score can potentially hurt a person’s employment.

How to Build Credit History

Building a credit history worthy of a score takes time. It can be as long as three to six months. But there are ways to make the most of the time, according to

Card invisibles, for example, can apply for a collateralized loan wherein they can use their certificates of deposit (CDs) as security. In turn, they can get up to 90 percent of the CD balance. It is much easier and more convenient to pay.

They may also qualify for secured credit cards. It gives card invisibles access to credit card debt in exchange for a deposit placed in another account. The amount available for use is usually equal to such deposit.

Those who are building their credit history also need to ensure they pay their debt on time, as well as monitor the score. Mistakes such as non-reporting by lenders can still result in a poor or missing score.