Woman looking a credit score on phone
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Your FICO credit score is an important number in your financial life. It determines the interest rates you’ll receive on credit cards and loans. A good credit score can help you qualify for the best cash back credit cards. It can even affect your ability to buy a house or rent an apartment. Unfortunately, it’s hard to increase your FICO score unless you have a credit history to build upon. About 53 million consumers are what FICO deems “un-scoreable,” which means there isn’t enough information in their credit files to determine their credit scores.

If you’ve made a few late payments on credit card accounts in the past, your score can suffer. Dave Shellenberger, VP, Scores and Predictive Analytics at FICO, says about 78 million consumers have run into financial distress in the past. “They have FICO scores below 680 and they may have difficulty obtaining credit under the terms they’re seeking,” he says.

In recent months, lenders have been working with FICO, the predictive analytics organization charged with determining the creditworthiness of many consumers, to loosen the reins on tight lending requirements and make it easier for people to obtain credit.

“Lenders are trying to find more ways to say yes,” says Shellenberger. “But they want to do it in a safe and responsible way.”

Fortunately, Experian, one of the three major credit bureaus in the U.S., and FICO, have developed some ways to make it easier for people with no credit or poor credit to obtain loans.

Experian Boost can raise your credit score

Introduced in December 2018 and rolled out May 1, 2019, Experian Boost is a new, opt-in program that allows people without credit cards or personal loans to improve their credit score quickly.

Your history of on-time payments accounts for 35% of your payment history. Traditionally, this includes credit card payments and installment loans.

When you sign up for Experian Boost, the credit bureau will recognize your other on-time bill payments, including gas, water, electricity, TV, internet and phone bills.

Just visit the Experian website, enter your checking account number, and Experian will search your transactions for evidence of payments to phone and utility accounts.  A report will show you your old and new credit scores for free. If you don’t like the results, you can remove those utility accounts that are hurting your credit history.

“The consumer has a lot of control over which utility accounts affect their credit score, and whether they want it to continue to affect their credit score,” says Steve Ely, CEO of ecredable.com, a credit reporting agency focused on helping consumers and businesses obtain credit.

In addition to boosting your on-time payment history, utility accounts and the like show up as “trade lines” on your credit report, which can also increase your credit diversity, a factor that makes up 10% of your credit score.

“For people who have a lot of information in their credit file already, this might make no difference at all – since there’s so much rich information to evaluate there already,” Ely explains. “But it can have a substantial effect on the credit score of a younger person – for instance, a millennial with just a few credit cards.”

Unfortunately, you can’t do anything about late credit card or installment loan payments – only time will erase those black marks from your credit report.

Experian Boost gives people with a short credit history the opportunity to show a history of on-time payments that weren’t previously reported to the credit bureaus.

How secure is Experian Boost?

According to the credit bureau, Experian has limited, read-only access to your accounts, and your information is secure and encrypted when you enter it on their site. The credit bureaus already have the bulk of your personal and financial information, so there’s very little risk to using Experian Boost to improve your credit score.

What else can I do to raise my credit score in 30 days?

If you pay your utility and cell phone bills on-time, Experian Boost can raise your credit score instantly. But there are multiple FICO scores that lenders use to judge your creditworthiness. And Experian isn’t the only credit bureau.

For lenders who use FICO scores calculated by TransUnion or Equifax, you’ll need a few other tips if your goal is to increase your score fast.

Dispute mistakes on your credit reports.

Start your journey toward better credit by pulling all three of your credit reports. Remember, when you check your own credit, it won’t hurt your credit score. Examine your reports for errors and dispute any errors you find online as part of an annual credit report spring cleaning – or whenever you’re planning to apply for new credit.

Look for red flags on your credit reports.

Once you’ve eliminated errors, check your credit report for red flags. A history of minimum payments, a host of credit inquiries and even being a co-signer on someone else’s loan can drag your score down.

Pay off past due items.

You may wonder if paying off collections will improve your credit. If you can fully pay off an account that’s in collections or bring it current and continue making on-time payments, it will help raise your credit score. You can also try to negotiate a settlement with your creditor, which is still better than showing an account in collections.

Try decreasing your credit utilization ratio.

Your credit utilization ratio – the amount you owe vs. your available credit – makes up 30% of your credit score. Paying more than the minimum on your credit cards or transferring high-interest debt to a credit card with a 0% introductory balance transfer offer, may help increase your FICO score.

Improve your payment history.

Since 35% of your credit score is determined by your payment history, paying your bills on time is the most efficient way to increase your credit score. Experian Boost helps by factoring in regular household bills as part of your payment history but paying all your bills on time will help you raise your FICO score fast.

Use UltraFICO to obtain the credit you need

Improving your credit can take time, however. And many people find themselves just under the threshold to qualify for rewards credit cards or low interest rates on loans.

UltraFICO can help by giving lenders a whole new way to evaluate borrowers based on their income and other financial activity. “Lenders can use UltraFICO as a ‘second chance’ score,” Shellenberger says.

The UltraFICO score is based on the same scale of 300 to 850 as the regular FICO score. In addition to taking into account your payment history, credit utilization, length of credit history, new credit, and diversity of accounts, UltraFICO also looks at the information in a borrower’s checking, savings or money market account – with permission from the consumer, of course.

“We see patterns in how people manage their checking and savings accounts that correlate very strongly with how people manage their credit obligations,” says Shellenberger.

What factors go into an UltraFICO score?

Four factors go into determining your UltraFICO score:

  1. Length of time accounts have been open
  2. Recently and frequency of bank transactions
  3. Evidence of consistent cash on hand
  4. History of positive account balances

Shellenberger says 40% of consumers with an average balance of $400 or higher and a history of avoiding negative account balances see an increase of 20 points or more by using UltraFICO.

“Consumers who have thin credit files, including younger consumers and immigrant populations trying to obtain credit for the first time, can benefit from UltraFICO, moving them into an acceptable range for many lenders,” he says.

How can lenders obtain your UltraFICO score?

Although the program is fairly new, Shellenberger says there is widespread interest in using UltraFICO from lenders in every sector – from fintech companies to credit unions.

When you complete an online loan application, lenders may offer the option of entering some additional financial information to generate an UltraFICO score, which could help a borrower qualify for a better credit card or a lower interest rate.

Borrowers cannot proactively check their UltraFICO score the way they can their regular FICO score. But Schellenberger says FICO is working on greater transparency, as well.

“We’d like to create a mechanism for the consumer to check their UltraFICO score, and potentially even make consumers aware of lenders who are using the UltraFICO score,” he says, noting that these capabilities could become available by the end of the year.

Best cash back credit cards to strive for

Whether you use Experian Boost to give your credit score those points it needs to qualify for rewards credit cards, or use UltraFICO to reach the next borrowing tier, a credit score of 670 or higher should help you qualify for these cash back credit cards.

Citi® Double Cash Card

What’s better than giving lenders two credit scores – UltraFICO and FICO – to help you qualify for a loan? Earning double cash rewards from Citi. Earn 1% when you make a purchase, and another 1% when you pay your bill.

With no annual fee, a zero percent balance transfer offer for the first 18 months you own the card, and a host of perks, this card is great for everyday spending. Just watch out for the 15.74% to 25.74% variable APR if you don’t pay your purchase balance in full.

Capital One® Quicksilver® Cash Rewards Credit Card

The Capital One® Quicksilver® Cash Rewards Credit Card has a modest, yet consistent, rewards rate of 1.5% cash back on every purchase, with no cap. The welcome offer of $150 cash back after you spend $500 on purchases within the first three months makes this the perfect card for those new to credit to enter the realm of cash back rewards. Plus, there’s never an annual fee.

Take advantage of a 0% intro APR on purchases and balance transfers for the first 15 months. The interest rate jumps to 16.24% to 26.24% variable after that.

Chase Freedom Unlimited®

Chase Freedom Unlimited doesn’t have an introductory bonus, per se, but it offers 3% cash back on all purchases in the first year, up to $20,000. After that, you’ll earn 1.5% cash back.

Like Capital One Quicksilver, Chase Freedom Unlimited is offering a 0% intro APR on purchases and balance transfers for 15 months, but beware of the 17.24% to 25.99% variable APR.

The Chase Ultimate Rewards portal makes it easy to choose cash back, statement credits, or to redeem your rewards for anything from gift cards to travel experiences. There’s no annual fee.

Bottom Line

With more ways than ever to qualify for rewards credit cards, you can build your credit while you earn cash back. If you don’t qualify for these rewards cards right away, consider using Experian Boost or asking about UltraFICO to earn the credit you deserve.