How to Establish Credit if You’re Unscoreable

What Does It Mean to be Unscoreable?

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 scoring requirements. These are slightly different for FICO and VantageScore^® credit scores.

For FICO’s credit scoring models, you need to have both of the following:

• 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. But you can also satisfy them with different accounts. Perhaps you paid off a loan last year and haven’t used credit since. That account is over six months old, and you could become scoreable if you open a new loan or credit card.

VantageScore’s credit scoring models don’t require as much 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

You can become scoreable by adding new information to one of your credit reports. There are many ways to do this, but here are five simple and low-cost options.

1. Open a Secured Credit Card

Secured credit cards are created for people who are new to credit or rebuilding their credit. They work just like unsecured or regular credit cards in many ways, but there are a couple of important differences.

• Requires a security deposit: You may need to send the card issuer a refundable security deposit that determines your card’s credit limit. Alternatively, some companies offer secured credit cards that are linked to their bank accounts—allowing you to deposit or withdraw money to change your limit at any time.
• Potentially high rates and fees: Some secured cards have high fees and interest rates, but the best secured cards don’t charge an annual fee and offer various cardholder rewards and benefits.

You can build credit with your secured card without paying interest by using the card for small purchases, such as a subscription, and then paying the bill in full each month.

2. Take Out a Credit-Builder Loan

A credit-builder loan is a secured loan that you can take out to establish or build your credit, but you don’t receive the money at the start.

• The funds get locked up: The lender will place the funds from the loan in a locked savings account. You might have access to them as you make your payments, or once you pay off the entire loan.
• Adds to your credit report: The lender reports the account and your payments to the credit bureaus. Keep in mind, most credit-builder lenders report to all three credit bureaus (Experian, TransUnion and Equifax), but not all do. To build credit this way, make sure the lender reports to all three.
• Compare your options: You can often find credit-builder loans from credit unions, community banks and online credit-building apps. There may be a subscription fee or interest on the loan.

Another option may be a lending circle loan. These are interest- and fee-free loans that are available in some areas through nonprofit organizations.

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

You also might be able to establish your credit if someone adds you as an authorized user on one of their credit cards. Becoming an authorized user doesn’t require a credit history or credit check, and the entire account history might be reported to the credit bureaus under your name.

• Requires someone else’s help: The primary cardholder has to add you as an authorized user on their account—you can’t add yourself.
• The primary cardholder maintains responsibility: Although you might be sent a credit card that’s tied to the account, the primary cardholder retains control over the account and responsibility for the payments.
• You don’t need to use the card: The entire account could be reported under your name even if you never use the card you receive.

Once you’ve established your credit, you can try to qualify for a credit card or loan on your own. You also may be able to remove the authorized user account from your credit reports if the primary cardholder isn’t managing the card responsibly.

4. Get a Cosigner on a Loan

If you need to take out a loan but aren’t scoreable, you might be able to qualify by adding a creditworthy cosigner to your account. Or, if someone you trust is applying for a loan and has good credit, you could offer to cosign.

Unlike with authorized user accounts, both cosigners are equally and fully responsible for the debt. With this in mind, it might be best to avoid cosigning unless you’re applying alongside someone you trust completely.

5. Sign Up for Experian Go™

You can sign up for the free Experian Go program to establish your Experian credit report and get 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. The payment history from these accounts could help thicken your credit file and improve your scores.

However, you may still want to use the credit accounts mentioned above to establish your credit with the other credit bureaus.

How to Use Credit Responsibly

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

Some of the best ways to improve your credit scores over time are to:

• Pay all your bills on time. Your payment history is one of the most important scoring factors. On-time payments can help your scores, while missing payments can hurt them significantly. Even if you have an account that isn’t reporting your payments to the credit bureau, missing payments could lead the company to send your account to collections, which could also hurt your scores.
• Don’t use a large portion of your credit limit. Your revolving credit utilization ratio is also an important scoring factor. It’s a measure of how much of your credit limits you’re using, and a lower utilization ratio is best. That’s one reason why using a credit card for a small payment and then 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 hurt your credit scores a little. You may want to open several accounts to establish and build your credit at the start. After that, only apply for new accounts when you need a loan or find an especially great credit card.

If you can stick to these three 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 one reason it can take time to build good credit. You can monitor your progress with Experian’s free credit monitoring feature. You’ll also receive a monthly FICO Score for free, real-time alerts when there are important changes in your credit file and insight on what’s affecting your score the most. If you signed up for Experian Go or Experian Boost, you already have access to all these features for free as an Experian member.