Whether you have limited credit, or no credit history at all, this article from Bankrate offers six strategies you can use to try to establish, re-establish or enhance your credit file.
One in 10 adults in 2015 is “credit invisible,” meaning they have no established credit with a nationwide reporting agency, according to the Consumer Financial Protection Bureau. Another 8% have insufficient credit history or one that’s too old to track.
Many times, consumers with no credit history are new to the world of credit. They can find themselves in a Catch-22 scenario, says Jennifer Tescher, president and CEO of the Center for Financial Services Innovation in Chicago.
“You need to have a credit history to get credit,” she says. “And you need to have credit to build (a) credit history.”
A “thin file” means you don’t have much of a track record with credit. Either you have only a few accounts, or your credit is relatively new, or both, says Maxine Sweet, who retired in 2014 from the credit bureau Experian, where she was the vice president of public education.
Some of the groups at risk for no credit or a thin file include young adults, the elderly (if they haven’t used credit in a while), new immigrants and people who avoid credit.
Working to establish credit? Go slow, be very selective in your applications and nurture existing accounts. Never pay late, and – with credit cards – keep balances reasonable.
Particularly dangerous are multiple applications. Someone who is going from no credit to multiple applications in a short period is someone who could be getting in over their head.
If you have a history of credit but no longer have a score, make a small purchase on one of your existing accounts and pay it off right away, says Barry Paperno, consumer credit expert.
That will give you the recent activity the scoring formula needs to assign you a score, he says.
