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According to the Consumer Financial Protection Bureau, around 45 million consumers in the United States are “credit invisibles”—people who do not have scorable credit records. It’s a financial state that can make it more difficult to do things such as get loans, qualify for affordable car insurance, or even get a job. Discover more about the credit invisible below and whether you’re one of them.
Credit invisible simply means not having a credit history with one of the three major credit bureaus. Those bureaus are TransUnion, Equifax, and Experian.
If you don’t have a credit history with one of those organizations, you likely don’t have a credit report. That means when lenders go to check your credit to evaluate you for a loan, they can’t see anything about you. You’re invisible to them with regard to credit.
Answer the questions below to find out if you might be a credit invisible.
Have you ever applied for credit? | Yes | No |
Do you have a current credit card in your name? | Yes | No |
Have you had a credit card in your name in the past 7 years? | Yes | No |
Do you have a current loan of any type in your name, such as a personal loan, car loan, or mortgage? | Yes | No |
Have you had a loan in your name in the past 7 years? | Yes | No |
Are you an authorized user on a credit card for someone else? | Yes | No |
Do you use a credit building service to have rent, car insurance, or other payments reported to your credit file? | Yes | No |
If you answered no to all of the above questions, you’re probably credit invisible. You might also be credit invisible if you can answer yes to only one or two of those questions.
Being credit invisible might sound cool, but it can actually be a major hassle. Businesses of all types use credit histories and scores to evaluate you as a borrower, customer, or employee, and if you don’t have any credit history to look at, that makes you a complete mystery to them.
Businesses don’t like mysteries. If they can’t learn anything about you, they can’t make an appropriate risk assessment on doing business with you—which means they might not want to lend you money or offer you services. Here are just some ways being credit invisible can make life difficult:
Being credit invisible isn’t the same thing as being credit unscorable. Someone who is credit unscorable has a credit history. It just doesn’t contain enough information for the credit scoring models to calculate a score.
Two main reasons exist for being credit unscorable. The first is having a thin file. This means you don’t have enough credit history for the scoring models to work. Around 62 million people in the US have thin credit files. Often, they’re young people just starting out with building their credit.
Another common reason for being credit unscorable is having a stale credit file. This means someone has a credit history, but there’s nothing recent on it. That makes it hard for the scoring models to arrive at a credit score for that person. FICO considers credit files with no activity in over six months as stale.
If you’re not sure if you’re a credit invisible or someone who simply has an unscorable credit file, no worries. The actions you need to take to build your credit so you can get a credit score—and hopefully a good one—are the same.
Here are some of the things you can do to start building credit and become credit visible.
It takes work to build good credit, so make sure you take steps to keep it. That includes managing finances responsibly and making all your bill payments on time. You might also keep tabs on your credit report and score with a service like ExtraCredit. That way, if you see a mistake that could harm the good credit you worked hard for, you can challenge the error quickly.
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