When it’s time to buy a home, one of the first things that is checked is your credit score. This can be a challenge for many.
A couple of weeks ago, the Consumer Financial Protection Bureau published an article entitled “Who are the Credit Invisible?,” in which they reveal the numbers of consumers that are ‘credit invisible’ or have records that are unscored.
Their figures indicate that 26 million consumers do not have a credit history, and an additional 19 million consumers have “unscorable” credit files. Together, almost 20 percent of the entire U.S adult population is credit invisible.
What did they say about Hispanic consumers?
The results by race suggest that Hispanics are more likely to be credit invisible (about 15%), as well as to have unscored credit records (12%).
What is the impact of credit invisibility?
As their report explains, “Credit invisibility can exclude consumers from accessing financial opportunities.” These opportunities include things like buying a home, getting a personal loan, or even applying to lease an apartment, as landlords may use credit reports to evaluate applications.
If you are credit invisible, the Consumer Financial Protection Bureau provided a checklist that includes some actions to take in order to build credit. Here are three examples:
- Pay your bills on time – a critical step in building a good credit score.
- Find products that will help you – products like secured credit cards, credit builder loans and retail store credit cards. Some are easy to obtain and offer lower credit lines, a combination that will help you build a credit record.
- Report rent and other less traditional payment data to credit reporting companies – this data can include monthly rent or cell phone payments, and can be self-reported through companies that offer this service.
If your plan for the future is to own your own home, it is time to start working on building your credit!