Are You Unscorable?


The topic of credit repair is a broad one, and while it mostly focuses on recovering from past mistakes, it can also encompass credit creation.

Consumers who are new to the credit realm are often tagged with the term “unscorable” because the credit bureaus do not have enough information to create a credit file in their name. For example, an unscorable consumer usually falls into all of the following categories:

  • A new adult or American citizen with no credit experience
  • No credit cards
  • No bank account
  • No mortgage or auto loan
  • No personal (or reported) rental, utility, or cable accounts

Even those with previous credit histories can fall off the map if they close all accounts and fail to use credit for more than six months. There are a few things you can do to build your credit file and establish a positive score:

  • Order your credit reports. It’s impossible to know your credit status without contacting the credit bureaus. Every consumer is entitled to free annual copies of their TransUnion, Experian and Equifax credit reports via Order yours to see where you stand.
  • Assess your accounts. The average consumer isn’t getting the full benefit of “alternative” credit data, also known as unreported data. For example, suppose you rent an apartment, have cell phone service and a cable package, and yet, none of these accounts appear on your credit reports. In general, these types of lenders fail to report histories to the bureaus unless a problem exists, costing you credit score points in the process. Contact your lenders directly to learn more about their policies. A simple request to report could lead to fast and easy credit creation.
  • Open a credit account. The concept of credit can be overwhelming without the right perspective. Rather than viewing credit and debt together, consider using credit as a tool to help you create a positive future. Start slow by opening one of the following accounts:
    • A secured credit card. Consumers with no credit history may find it difficult to get approved for a standard line of credit. Consider applying for a secured credit card first. This type of card requires pre-loading funds before use like a debit card, however, your activity is reported to the bureaus like a regular credit account. Steady use will also allow you to convert the card to standard credit after a period of six months to a year.
    • Personal loan (with a cosigner). Applying for a small personal loan, e.g., a line of credit at the local bank or a federal student loan can help you establish credit with necessary funds and a manageable repayment schedule. Ask a close family member to act as your cosigner and remember that your actions affect their credit health as well. Pay your bill in full and on time to avoid taking advantage of their generosity.
  • Remember the Five Factors. Losing the “unscorable” label takes time, and it’s important to establish healthy habits from the very beginning. Click here to review the Five Factors that determine how your credit is calculated. Understanding the facts is your first priority.

The bottom line: A world of opportunity waits for those who take the right steps. Begin your journey with knowledge and planning; the result will help you achieve the credit score you deserve.