How to Improve Your Credit and Avoid Being Credit Invisible

About 35 to 44 million U.S. adults are invisible to the financial system, reports the American Bar Association. For this reason, they have a difficult time getting a loan or renting a home. They also have to pay more for certain services, such as car insurance.

Consumers who fall into this category often have underscored credit records or no credit history at all. As a result, they may face challenges in securing work, buying property, and aspects of everyday life.

The good news is, there are ways to improve your situation if you're credit invisible.

One option is to leverage alternative credit data. Meanwhile, you can take the steps needed to build your credit score.

Interested to find out more? Use the strategies below to build and improve your credit.

Apply for a Secured Credit Card

When used responsibly, secured credit cards can help you establish, improve, or rebuild your credit. They work like any other credit card, but you must pay a security deposit upfront.

The credit limit on your card depends on the amount of the deposit. The more you pay upfront, the higher the amount you can borrow. Most lenders will return the deposit when you close the account or switch to an unsecured card.

To build or improve your credit score, it's necessary to pay your credit card balance every month. This will keep your account in good standing and prove that you're financially responsible.

Later, you may apply for an unsecured card and continue to build or improve your credit.

Becoming an Authorized User on Someone Else's Credit Card

Another option is to ask a family member to add you as an authorized user to their credit card account. In this capacity, you will be able to use their cards as if they were your own.

By becoming an authorized user, you can prove your creditworthiness and build or strengthen your credit score.

Failure to use the card responsibly, on the other hand, can make things worse for both you and the cardholder.

This strategy, which is known as piggybacking, only works if the cardholder has an excellent credit score. Note that both users must pay the balance on time.

Leverage Alternative Credit Data

A growing number of lenders are using alternative credit data to determine customers' creditworthiness. This data may include utility bill payments, rental payments, employment history, and more.

Alternative credit scoring makes it easier for the unbanked and underbanked to qualify for loans, mortgages, and other services. Moreover, alternative credit data may help you build and strengthen your credit.

Connect enables users to access their alternative credit reports for free. The information is automatically updated each month. All you need to do is to log into your account and check your data.

Know What to Do If You're Credit Invisible

Being credit invisible can make your life more difficult, but there are ways to get out of this situation.

Small things, such as applying for a secured credit card, can help establish and improve your credit score. You may also open a store card or become an authorized user on another person's credit card.

For starters, register on Connect to get a free alternative credit report. Reach out to our team or browse our News section to find out more!

Want to learn more?