Citizens in the United States who have little or no FICO credit history can face challenges when it comes to accessing credit and financial services. Here are some key data points related to this group:
- According to the Consumer Financial Protection Bureau (CFPB), an estimated 26 million adults in the US are “credit invisible,” meaning they have no credit record with the three major credit reporting agencies (Equifax, Experian, and TransUnion).
- Additionally, about 19 million adults have “unscorable” credit records, which means they have a credit record but not enough credit history to generate a credit score.
- The majority of individuals who are credit invisible or have unscorable credit records are low-income or have limited financial resources. The CFPB notes that credit invisibility is more common among younger people, those with lower income and education levels, and Black and Hispanic individuals.
- Without a credit history, it can be difficult for individuals to access credit or financial services, which can make it harder to buy a home, finance a car, or access other types of credit.
- To establish a credit history, individuals can consider using alternative credit data, such as rent payments, utility bills, or other recurring payments, that can be reported to credit bureaus. Some financial institutions also offer secured credit cards or credit-builder loans to help individuals establish credit.
In addition to establishing credit, it’s important for individuals with limited or no credit history to practice good financial habits, such as making on-time payments and keeping debt levels low, to build a strong credit profile over time.
A good FICO score, which is a credit score developed by the Fair Isaac Corporation, can have several benefits. A good FICO score can help you secure lower interest rates on loans, credit cards, and other financial products. Lenders see a higher credit score as an indicator of your ability to repay your debts, and are more willing to offer you better terms and lower interest rates. A good FICO score can also help you qualify for higher credit limits on your credit cards. This can give you more financial flexibility and allow you to make larger purchases without having to apply for additional credit.
If you’re looking to take out a loan, a good FICO score can increase your chances of getting approved. Lenders are more likely to approve borrowers with a good credit history, which can help you secure the financing you need.
Your FICO score can also impact your ability to rent an apartment or house. Landlords often use credit scores to assess the financial responsibility of potential tenants, and a good FICO score can make the rental application process easier.
A good FICO score can help you qualify for credit cards with better rewards programs and lower fees. This can help you save money and earn more rewards on your purchases.
Overall, maintaining a good FICO score can help you access better financial products, save money on interest and fees, and improve your financial standing.
Reporting rental payments to the US credit bureaus can have a number of benefits for renters, particularly those who are looking to build or improve their credit scores. For individuals who don’t have a lot of credit history or who are just starting out with credit, rental payments can be a valuable way to establish a track record of on-time payments. Consistently making on-time rental payments can help renters build positive credit history, which can help them qualify for credit cards, loans, and other types of credit in the future. Payment history is one of the most important factors in calculating credit scores.
By making on-time rental payments and having them reported to the credit bureaus, renters can improve their credit scores over time. By paying rent on time and having that information reported to the credit bureaus, renters can demonstrate to lenders and other financial institutions that they are responsible and reliable borrowers. With a stronger credit history and higher credit score, renters may be able to access better credit terms, such as lower interest rates on loans and credit cards, higher credit limits, and better loan terms.
Overall, reporting rental payments to the US credit bureaus can be a valuable way for renters to build credit and establish a positive financial track record. However, it’s important to note that not all landlords or property managers report rental payments to the credit bureaus, so it’s worth asking about this when signing a lease or rental agreement.
If you are a property manager, property owner or are renting and are interested in rental payment reporting, CredHub can help. Set up time or get started here.
