What Happens When Your Credit Score is No Longer ‘Unscorable?’

Do one thing: When building unscorable credit, or boosting established credit, you have to keep in mind that it typically takes some time to move the needle forward.

Millions Without Credit

Young adults (and those who haven’t used credit cards or taken out loans in a few years) may have been told by a credit card company or bank that they may not qualify for a particular card or loan because they don’t have a credit score that can be described as “unscorable.” 

Credit Unscorable or Invisible

Plenty of others are in similar situations. In America, it’s estimated that nearly 40 million adults have been placed in the category known as ‘credit invisible’ in recent years.

• 32 million U.S. adults have been described as unscorable for credit because they don’t have enough traditional credit files on record. 
• 2.7% of American adults, or about 7 million people, don’t have credit files at all, according to the Consumer Financial Protection Bureau.

Pro-Tip: It’s important to note that sometimes, people don’t have credit scores that can be calculated because they pay cash for purchases and use debit cards exclusively, and close credit cards to remain debt-free.

Building Stronger Credit Scores

Once someone with a suppressed or unscorable credit file finally generates a score, the initial number often looks lower than expected. A credit score, which falls between 300 and 850 in the U.S., is like a report card for how you handle your debts, including credit card accounts. The higher end of the score range is typically better than the low end when it comes to qualifying for the best rates on loans and credit cards. 

Certified financial planner Joon Um, EA, CLU, ChFC, with Secure Tax & Accounting, Inc., in Beverly Hills, California, says someone’s first credit score can seem to be on the low side simply because there isn’t enough history yet. 

Starting Point for Credit Unscorables

“From what I see, the best way to improve it is pretty simple: pay everything on time, keep credit card balances low, avoid opening too many new accounts, and give it time,” he says. “I tell people not to worry too much about that first score. It’s really just a starting point, and several months of consistent credit habits can make a meaningful difference.”

Seven Strategies for Boosting Your Credit

Whether you have unscorable credit and are trying to boost your score as quickly as possible, or could just use some reminders on the best practices to improve that three-digit number, follow these tips and strategies to improve your credit score in the coming months.

1. Make every payment on time. This is first because it’s the most important. Your payment history is one of the biggest factors in your credit score. That’s why it’s vital to pay on time every month. Just one payment that’s more than 30 days late can ding your credit score. And that mark will be visible to anyone who looks at your score for the next seven years.   

2. Automate payments. To make sure you are not penalized for being forgetful, set up automatic payments with your credit union or bank – or even reminders on your smartphone – so that bills are paid on time. Whenever possible, pay your balances in full. Learn how autopay can give your payment history the boost it needs.

3. Consider early payments. Once you no longer have unscorable credit, you can also make a payment about a week before your statement closing date. That can help ensure a lower balance is reported to the credit bureaus.

4. Keep credit card balances down. Credit utilization measures how much of your available credit you’re using. As a general guideline, try to keep your utilization below 30% on each card and across all of your cards combined.

5. Limit new credit applications. Applying for or opening several new credit accounts within a short period can make you appear riskier to potential lenders. This can impact your credit score, and not for the better.

6. Keep older accounts open. Older credit accounts can contribute to the length of your credit history. Closing an established card also can reduce your available credit and increase your overall utilization ratio.

7. Reach out to your creditors. One great tip for those who no longer have unscorable credit, is that if you miss a payment because of an isolated error, contact the creditor as soon as possible and explain what happened. If you have otherwise maintained a good payment record, the creditor may be willing to work with you and, in some cases, update the credit bureaus to reflect your improved payment history.

A Realistic Timeline for Building New Credit

Typically, it takes most people with unscorable credit about six months of positive history before the major scoring bureaus will generate a score. It’s important to remember that building a solid credit score can take a little longer, but often 12 months of on-time payments and low balances land most people in good shape. 

With reporting by Casandra Andrews