Report Details of No Credit ScoresAccording to the report, 26 million Americans don’t have history with the major credit reporting bureaus and another 19 million have outdated or limited credit history. The African American and Hispanic demographics were found most likely to be classified in one of the two aforementioned groups, with a 15 percent rate of credit invisibility compared to 9 percent for Caucasians. Furthermore, low income consumers are 30 percent more likely to have credit invisibility, compared to just low single digit percentages in upper income areas. No Credit Scores for 45 Million Americans. Young adults ages 18-19 make up the majority of this “no credit score” stat at about 80 percent, as the study indicated that many had little time to build credit history or use debit cards instead of credit cards, among other reasons. Credit invisibility or lack of adequate history is also high among those 60 years old and greater.
Importance of a Credit ScoreThose 45 million who don’t have an adequate credit score are obviously at a major disadvantage when it comes to getting a loan – whether it be a home, auto or student loan. But thankfully, there are a number of ways one can either build – or rebuild – credit history:
- Get a secure credit card: These cards draw on money that is deposited in a bank and don’t require a credit score to obtain. Just be sure the card you choose reports to the three main agencies, as not all of them do.
- Credit builder loans: These are loans where the lender makes payments over a loan’s life and then receives the money, along with any accrued interest, after this time period is over. If you belong to a credit union, you should qualify for a credit builder loan.
- First credit cards: Remember, about 80 percent of those without a credit score are 18-19-year-olds. Make sure you get your kids an entry-level, low limit credit card before they go off to college or after they graduate high school so that they can begin to build credit and learn about managing it responsibly.