|How to establish a great credit score
|By Sheyna Steiner • Bankrate.com
During the heady days of the mid-2000s,
consumers were seduced by easy credit and pay-later
promises. But not everyone jumped on the credit bandwagon.
People who weren't old enough to get credit, lived
in another country or just didn't need any credit
may have missed the easy-lending parade.
Post-meltdown, establishing a credit history may be a little bit tougher for people with thin credit files. But you can get credit by taking some shortcuts.
|Ways to build a credit score
Overcome a thin credit file
Americans don't pop out of the womb eligible for credit and sporting a FICO score. Instead, credit histories must be built, and then, with an established credit report, consumers qualify for a credit score.
People with very little credit information are said to have thin credit files.
Craig Watts, public relations director at FICO, says that his company estimates that 22 million Americans have no credit record at all, and another 30 million have thin files.
Thin files contain not enough information
with which to calculate a credit score.
"The common definition in the industry
of a thin file is a credit report that has less than
or equal to three trade lines," says John Ulzheimer,
president of consumer education at Credit.com and
a contributor to CNBC.
A trade line is basically an account,
such as a car loan or a credit card account. The accounts
must be on the credit report for several months before
the account holder qualifies for a credit score.
"Just because you have a credit report
doesn't mean you have a score. The account has to
be on your report for at least three months before
you start to qualify for a score," Ulzheimer says.
Once the file can be scored, the rules change a little for the borrower.
With excellent credit management --
keeping the balance reasonable in comparison to the
limit and making payments on time every month -- "there
is nothing to prevent a lender from offering more
unsecured lines of credit," Ulzheimer says.