How to Build Credit Without a Card or Loan

For many people, credit can feel like a “chicken and the egg” problem – it seems like you can’t get credit unless you have credit. While there is an opportunity for almost everyone to build credit through secured credit cards or secured loans, those can take time. And what about all those rental and utilities payments you’ve been making? Since they don’t show up on traditional credit reports, do they mean nothing for your credit-worthiness? It can be a frustrating dilemma.

Experian, one of the three major credit reporting agencies in the country (along with Equifax and TransUnion), has created what they are calling an “Extended View Score” to address some of these issues. The idea is to open up credit opportunities for those who in the past would have been denied because they lacked a record of using credit that a financial institution could examine.

Experian says the score will use information like credit history, rental information and public records. While the entirety of how this data will be used to calculate a score is unknown, presumably on-time payments and the absence of public records like bankruptcies, judgments or tax liens, would reflect well on one’s Extended View Score. It is important to keep in mind that the recipient of any rental payments you make would need to actually report that information for it to be registered in any scoring calculations. Experian RentBureau has been set up by the company to receive and process rental payment history.

While it is up to financial institutions to choose what reports and score they use to make lending decisions, the addition of alternative scores could mean more opportunities for those without an established, traditional credit history. As it remains to be seen how widely this new score will be adopted though, the best bet is still likely going to be to look for ways – like secured credit cards or secured loans – to build a more traditional credit history.

Revised January 2016.

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