myFICO: 4 Ways to Establish a FICO® Score Without Applying for a Credit Card
2024年5月15日 - 1:34AM
ビジネスワイヤ(英語)
A credit card can be a useful tool when you’re ready to
establish a FICO® Score for the first time. But if you prefer to
build a FICO Score through different methods, you’ll be happy to
learn that it is possible to build good credit without a credit
card as well. If you don’t feel ready to open a credit card yet,
myFICO presents some alternative options that might help you begin
your credit journey in other ways.
For more credit education, visit myFICO’s blog at
https://www.myfico.com/credit-education/blog
1. Credit Builder Loan
When you’re building credit from scratch, it can sometimes be
difficult to qualify for your first credit accounts. Without
existing credit history, lenders may be hesitant to take a chance
on you and approve you for certain types of new financing
products.
A credit builder loan could be a good solution to consider when
you have no FICO® Score or a thin credit file. This type of loan is
designed to reduce the lender’s risk. So, it may work well for
people who have no established credit or even those with bad
credit.
With a credit builder loan, the lender doesn’t give you the
money you borrow directly. Rather, there’s a waiting period.
One common method for lenders who issuer credit builder loans is
that they place your funds in a savings account or certificate of
deposit (CD). You repay the lender monthly, and once you make your
final installment payment the lender releases the loan proceeds
(minus any fees). Depending on the lender, you might even earn
interest on the loan proceeds it holds in savings until you pay off
the loan. But the interest the lender charges typically offsets any
interest you may earn.
Of course, the biggest potential benefit of a credit builder
loan is the potential to establish positive credit history. So,
it’s important to find a lender that reports account activity to
all three credit bureaus—Equifax, TransUnion, and Experian.
2. Other Installment Loans
It’s not a good idea to go into debt for the sole purpose of
establishing credit. But if you need to borrow money for other
reasons, the installment loans you open may have the potential to
help you build your FICO® Score.
An auto loan is one type of installment loan that could help you
build your FICO® Score if you manage it in a responsible manner and
the lender reports the account to the three major credit bureaus.
Even with little to no previous credit history, this type of loan
might be easier to qualify for than some other types of loans.
Auto loans are backed by collateral (aka the financed vehicle)
that the lender can repossess in the event of a default. This
collateral reduces the lender’s risk. Therefore, borrowers with
limited credit, no credit, or even poor FICO® Scores may find it
easier to qualify for auto loans with some lenders. Note that as
you work to improve your FICO Score, you could increase your
approval odds and save thousands with lower interest rates and
better borrowing terms.
3. Rent Reporting
Paying your rent on time is a good habit to establish. But if
your landlord doesn’t report your rent to the credit bureaus, that
positive payment history doesn’t have the ability to help build
your FICO® Score. Credit scoring models only consider information
that appears on your credit reports.
As a consumer, it’s not possible to add information to your own
credit report. Yet there are third-party rent reporting services
that might help share your rental payment history with one or more
of the credit bureaus on your behalf.
Some rent reporting services are free. Others charge a fee.
Additionally, some rent reporting services do not share information
with all three credit bureaus. Therefore, it’s important to do your
own research to nail down these important details.
Below are a few third-party services you may want to
consider.
- Experian Boost: You can use this free service to add
rent payments along with eligible utility bills, mobile phone
bills, and streaming services to your Experian credit report.
- Piñata: This free app allows renters to have their rent
payments reported to TransUnion at no cost.
- Self: This free service helps users report rent payments
to all three credit bureaus. A premium Rent+Bills service is also
available, including bill payment reporting to TransUnion, credit
monitoring, and additional services, for $6.95 per month.
- RentReporters: Receive 24 months of back rent history
with Equifax and TransUnion plus ongoing rental reporting. To join,
the company charges a $94.95 signup fee (split into 3 monthly
payments of $31.65) plus a monthly fee of $9.95.
4. Authorized User Status
Another possible way to establish a FICO® Score without opening
a credit card of your own is to become an authorized user on a
friend or family member’s account. If the card issuer reports the
account to the credit bureaus for both you (the authorized user)
along with the primary account holder, there’s a chance it might
benefit you.
Keep in mind, it’s best to ask a family member or friend to add
you to an account that is well-managed with positive payment
history and a low credit utilization ratio. If you become an
authorized user on a credit card with late payment history or a
high balance-to-limit ratio, the account might hurt your FICO®
Score rather than benefit it.
Bottom Line
Smart credit management habits can help you establish a FICO®
Score over time—with or without a credit card of your own. Yet no
matter what type of credit account you open, it’s important to
follow sound credit management habits.
On-time payments are a must, since payment history is the most
important factor that influences your FICO® Score. It’s also wise
to study other factors that shape your FICO Score so you’ll know
how to maintain good credit after you establish it.
About myFICO
Get your FICO® Score from the people that make the FICO Scores,
for free. Plus, free Equifax credit monitoring and a free Equifax
credit report every month. No credit card required. For more
information, visit
https://www.myfico.com/products/fico-free-plan-a
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version on businesswire.com: https://www.businesswire.com/news/home/20240514638349/en/
Elizabeth Warren ElizabethWarren@fico.com