“How to Become Scoreable: A Guide to Establishing Credit”

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What Does It Mean to be Unscoreable?

If you lack a credit history in the U.S. or haven’t used credit recently, you might not be scoreable by the main credit scoring models. This can make it challenging to qualify for new credit cards or loans with favorable terms. However, there are several ways to establish your credit or become scoreable again.

Understanding Unscoreability

Even if you’ve been paying monthly bills on time or borrowed money in the past, you might not be scoreable if you don’t meet a credit scoring model’s minimum requirements. These requirements differ slightly between FICO and VantageScore® credit scores.

For FICO’s credit scoring models, you need:

• A credit account in your credit report that’s at least six months old
• Credit activity on a credit account during the previous six months

You can satisfy both requirements with one account, such as a loan you’re repaying or a credit card you regularly use. Alternatively, you can meet them with different accounts. For example, if you paid off a loan last year and haven’t used credit since, you could become scoreable by opening a new loan or credit card.

VantageScore’s credit scoring models require less information. You could be scoreable if you have an account with activity, even if the account has only been active for one month.

5 Ways to Become Scoreable

Adding new information to one of your credit reports can help you become scoreable. Here are five simple and low-cost options:

1. Open a Secured Credit Card

Secured credit cards are designed for people who are new to credit or rebuilding their credit. They work similarly to regular credit cards but require a refundable security deposit that determines your card’s credit limit. Some secured cards have high fees and interest rates, but the best ones don’t charge an annual fee and offer various rewards and benefits. You can build credit by using the card for small purchases and paying the bill in full each month.

2. Take Out a Credit-Builder Loan

A credit-builder loan is a secured loan that helps you establish or build your credit. The lender places the loan funds in a locked savings account, and you gain access to them as you make payments or once you pay off the entire loan. The lender reports the account and your payments to the credit bureaus. Ensure the lender reports to all three major credit bureaus (Experian, TransUnion, and Equifax) to build credit effectively. Credit-builder loans are often available from credit unions, community banks, and online credit-building apps.

3. Become an Authorized User on Someone Else’s Credit Card

You can establish your credit if someone adds you as an authorized user on their credit card. This doesn’t require a credit history or credit check, and the entire account history might be reported to the credit bureaus under your name. The primary cardholder retains control over the account and responsibility for the payments. You don’t need to use the card for the account to be reported under your name.

4. Get a Cosigner on a Loan

If you need a loan but aren’t scoreable, you might qualify by adding a creditworthy cosigner to your account. Both cosigners are equally responsible for the debt, so it’s best to cosign with someone you trust completely.

5. Sign Up for Experian Go™

Experian Go is a free program that helps you establish your Experian credit report and provides recommendations for improving your credit. Once your credit report is established, you can use features like Experian Boost® to add eligible rent, utility, phone, and select streaming service payments to your credit history. This can help improve your scores and thicken your credit file.

How to Use Credit Responsibly

Becoming scoreable is just the first step. It can take time to achieve an excellent credit score. As your score increases, you’ll gain access to more types of credit cards, lower interest rates, and higher loan amounts. You might even receive better insurance rates and find it easier to rent a home or apartment.

Here are some tips to improve your credit scores over time:

• Pay all your bills on time. Your payment history is a crucial scoring factor. On-time payments can help your scores, while missed payments can significantly hurt them.
• Don’t use a large portion of your credit limit. A lower revolving credit utilization ratio is best. Using a credit card for small payments and paying the bill in full is a good way to build credit.
• Limit how often you apply for new accounts. New credit applications can lead to hard inquiries, which might slightly hurt your credit scores. Open new accounts only when necessary.

By following these tips, you’re well on your way to building good credit.

Track Your Progress for Free

Credit scoring models consider the age of your accounts when calculating your credit scores, which is why it can take time to build good credit. You can monitor your progress with Experian’s free credit monitoring feature. You’ll receive a monthly FICO® Score for free, real-time alerts for important changes in your credit file, and insights on what’s affecting your score the most. If you signed up for Experian Go or Experian Boost, you already have access to these features for free as an Experian member.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your credit journey and achieve your financial goals.

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