5 Ways To Look Beyond Your Credit Score To Build Financial Stability

About 30 million Americans are considered credit invisible, meaning they have no credit scores or recent credit histories. More than 60 million are considered thin-file, with fewer than five credit accounts to their name. And nearly 30% of US consumers with active credit files with credit scores under 620 are subprime.

People in these categories start from behind when applying for loans, housing or jobs. If you’re one of them, you should look beyond your credit score for opportunities to build financial stability. Start here.

1. Make sure rent and utility payments count toward your credit score

You pay your electricity, water, cable and rent on time every month. That’s good for your credit score, right? Not always. Many utilities do not report payment history to credit agencies, so these payments are often invisible.

You have options to make sure they are not Invisible on your credit report. One simple step you can take is to use a service to report your payments. Some options for reporting your rent payments include Experian Boost and Rent Kharma. Some of these services only send your data to one or two credit bureaus. So, you’ll want to compare your options and make sure that whoever checks your credit asks which bureau knows about your rent payments.

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These services are not guaranteed to improve your credit score, but they can increase users’ FICO scores. It’s worth taking the time to see which service will benefit you the most.

2. Use alternative credit data to improve your creditworthiness

If you are credit invisible, have a thin file, or are new to the United States and have no credit history here, find lenders that use alternative credit data when evaluating credit applications.

Examples of alternative credit data include pay stubs, transaction patterns, and cash flow. You do not need active credit accounts to generate this information. If your lender is working with a company like Inscribe or fiserv that provides alternative credit data analysis, you’ll need to provide the lender with the correct documents and account details. They will do the rest.

3. Dispute errors on your credit report

If it appears on your credit report, it must be accurate. right?

is wrong Credit reports show false information all the time. Sometimes, this is due to a simple computer error. In other cases, the cause is more sinister. Regardless of who is to blame, a credit reporting error can damage your credit and further derail financial stability.

You can prevent this by checking your credit report frequently. Checking your credit report is easy, and as of December 2023, it’s free to do once a week. Generally, you only get three free credit reports per year from each major credit agency.

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If you don’t see something right, dispute it with the credit agency. As per law, they have to investigate and respond. If it is a legitimate error, they will remove it.

4. Get a cosigner for loans and lines of credit

A cosigner puts their reputation (and credit) on the line to help you qualify for a loan, credit card or other credit product.

Since lending money to someone is a big deal, it is better to ask only close relatives like parents or siblings to do it for you. If you stop making payments, the cosigner will have to step in, or their credit score will drop. But if you find someone willing to do it for you, it opens up a lot of financial opportunities.

5. Find a steady W-2 job (that you love)

A wise man once said that when you love your job, you will never have to work a day in your life. May be without. It is certainly true that when you love what you do, you are less likely to quit. You are likely to retain a stable job.

This is important not only for your financial stability, but also for your credit. Lenders strongly prefer to lend to people with full-time jobs over the self-employed and business owners. They see income from traditional employment as more predictable than income from self-employment or business ownership.

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For good reason. Business owners and people who work for themselves have good years and bad years. Sometimes they find it difficult to pay their debts.

If financial stability and credit opportunities are important to you, find a job you love, negotiate a competitive salary package, and start making it yours. After doing all that, you can look for other income streams.

More than a number

Unfortunately, your credit score is more than a number. Your credit file is more than just a list. Fair or not, your creditworthiness touches every aspect of your life.

You have little control over your destiny when it comes to credit. There are many creative ways to build your credit or improve your credit score while you work to achieve financial stability. Here are some shocking credit card facts that most people don’t know you should do when trying to improve your score.

You can check your utility and rent payments for your credit score, get a cosigner for new loans and lines of credit, use alternative credit data to improve your creditworthiness, and more.

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