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How to improve your credit with eCredable

If you have a thin – or nonexistent – credit history, eCredable can help you boost your score quickly

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Published: November 13, 2020

Ted Rossman

Author:
Ted Rossman

Summary

By tracking your utility payments, eCredable adds an extra element to your credit report, which can significantly increase your TransUnion score.

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Building credit is more of a marathon than a sprint. You’ll need to pay your bills on time long term and prove that you can successfully manage different types of loans and lines of credit without racking up too much debt.

That said, there are some ways to jump start the process. These include getting on someone else’s credit card account as an authorized user, signing up for Experian Boost and lowering your credit utilization ratio.

Read more from our credit card experts.

Ask Ted a question.

The tactic that I want to focus on today is signing up for eCredable Lift. It’s an Experian Boost competitor that I believe has even more to offer. eCredable pulls utility information into subscribers’ TransUnion credit reports. Using traditional methods, these do not typically contribute to a consumer’s credit history.

eCredable supports nine different categories: power, gas, water, waste, mobile phone, cable TV, satellite TV, internet and landline phone bills. eCredable CEO Steve Ely says the company’s typical customer adds three utility accounts to their TransUnion report. The service costs $24.95 per year.

See related: How to improve your credit score

How it works

eCredable is an accredited data furnisher that can potentially add up to 24 months of utility payment activity overnight. It requests subscribers’ utility login information and uses that to determine whether or not payments were made in full and on time. These accounts get added directly to the consumer’s TransUnion credit report and are included in the popular FICO 8 and VantageScore 3.0 scoring models.

The benefits

While I’m generally not a big fan of paying to build credit – there are plenty of free ways to accomplish this – eCredable might be worth it for some people. The most rapid potential improvement is for people who don’t have enough of a credit history to generate a credit score.

An eCredable/VantageScore study found this sample consumer might expect to go from no credit score at all to a very solid 736 just by adding three utility accounts – assuming the payments from the last 12 months are made on time. That’s incredible. It would take them from a standing start to in the running for the vast majority of credit cards. By the way, Ely notes that Experian Boost does not work for people with no credit because it requires a credit report to get started.

 

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An older American whose credit history has gone dormant might also benefit from this. eCredable and VantageScore speculate that this individual could see an 88-point improvement (from 675 to 763) after adding three utility accounts with 12 months of on time payments to their account.

 

When derogatory information is present, eCredable is much less impactful, but that makes sense. On-time utility payments can’t outweigh serious delinquencies and maxed-out credit cards. The best candidates are people whose lack of recent credit is holding back their credit score, not people who have derogatory marks.

eCredable and Experian Boost

Experian Boost, which is free, requests users’ bank account information and monitors utility payments from there. Ely says this doesn’t provide as much detail as eCredable’s approach and that some lenders are skeptical because Experian Boost is easy for a user to disconnect (if, for example, it’s hurting their credit score).

That runs contrary to the typical credit reporting formula. Say you pay your credit card bill late – you can’t just hit a button to make that disappear from your credit report. Lenders want the full picture of potential risks.

Still, the way I see it, there’s ample room for both services. Experian Boost only affects Experian credit reports, and eCredable only works with TransUnion. Those credit bureaus each contract with approximately one-third of the lending industry, according to Ely, and Equifax (which does not currently have a comparable tool) provides data to the remaining third.

If you’re a consumer looking to improve your credit, you could benefit from signing up for both services. Before you apply for a loan, it’s not always easy to tell which credit bureau your lender will pull from. Sometimes you can find out by asking the lender or scouring online message boards for other consumers’ experiences.

See related: How I improved my credit score

Bottom line

Especially if you’re new to credit, programs such as eCredable and Experian Boost can give you credit for paying bills on time. These behaviors haven’t traditionally counted towards credit but could give consumers a head start on building a strong credit score.

Have a question about credit cards? E-mail me at [email protected] and I’d be happy to help.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Ted Rossman is the senior industry analyst at CreditCards.com. He has spent the past decade in the personal finance industry, conducting consumer and industry research and providing commentary for media and consumers. His focus areas include credit cards, debt management and credit scores. Ted regularly shares his advice via major media outlets such as Good Morning America, the Wall Street Journal, CNBC and Fox Business. He also writes the weekly “Wealth and Wants” column for CreditCards.com, which primarily covers cash back credit cards.

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What credit cards can you get with a 700 credit score?

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 Written by 

Karen Haywood Queen

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Although a credit score of 700 may not allow you to fill your wallet with high rewards credit cards named after precious metals and gems, you’re well on your way to that goal if you keep building good credit habits. You haven’t reached the credit mountaintop, but you can see the summit.

FICO credit scores, the industry standard for sizing up credit risk, range from 300 to a perfect 850—with 670 to 739 labeled “good,” 740-799 “very good” and 800 to 850 “exceptional.” A 700 score places you right in the middle of the good range, but still slightly below the average credit score of 711.

“A 700 score is not bad,” said Rod Griffin, senior director of consumer education and awareness at Experian. “It’s a little below average, considered prime or low prime. You likely would not get the best interest rates offered. You probably wouldn’t see the premium cards, not the diamonds or the golds.”

 

What can you do with a 700 credit score?

Instead of focusing only on whether a 700 score is good or not, consider whether it will allow you to reach your goals, said Victoria Sechrist, certified financial trainer at The Financial Gym.

“For example, some mortgage refinance lenders are requiring a minimum of 700,” Sechrist said. “Some credit card issuers say they want people with 720-plus to get their top tier cards. That doesn’t mean you can’t get approved for credit cards or a mortgage refinance; it just means you may have to shop around more to find a lender with lower credit requirements. If you’re looking for a personal loan or a 0 percent balance transfer credit card to refinance higher interest debt, then 700 should be good enough for you to qualify.”

In the 700 club, your credit limit will likely be close to the average credit limit of $4,200, said Ted Rossman, senior industry analyst at Bankrate. That limit can vary based on income and other debt.

With an average credit score, expect to pay around the average credit card interest rate of 16 percent, Rossman said. That’s better than the 20 percent or 25 percent those with lower scores will pay, but not as nice as the 7 percent or 10 percent people with scores of 740 and higher might achieve.

What credit cards can you get with a 700 credit score?

Although the prestige credit cards with rewards creeping up to 6 percent are probably still out of reach, a 700 score will put you into a better rewards bracket than those with a 600 score who qualify only for credit builder cards with minimal rewards, Rossman said.

“Today, a 700 credit score has you in the ballpark,” Rossman said. “But other factors are going to tip the balance as to whether you get approved or not.”

Lenders will take a hard look at your income, your debt-to-income ratio, late payments and recent debt.

 

“Somebody who has opened a bunch of credit cards is going to look risky,” Rossman said, as is “somebody who has run up a bunch of debt.”

Rossman said a consumer likely would qualify for a card like the Capital One Quicksilver Cash Rewards Credit Card, with 1.5 percent cash back and no annual fee, and the Citi® Double Cash Card, which offers 1 percent cash back when you spend and 1 percent back when you pay for your purchases.

Overall, Citibank and Bank of America tend to be a little more lenient in issuing premium cards, Rossman said, compared to American Express, Chase and Discover.

Factors in your favor include your relationship with the issuing bank—if you have a checking account or mortgage at that bank, for instance.

Even if you have a very good or excellent credit rating, issuers may turn you down if they see you’re adding lots of new cards. For example, some credit card issuers such as Chase may turn you down if you’ve opened five or more credit cards in the past two years.

2 quick ways to raise your credit score

1. Add rent and utility payments to your credit report

The good news is there are legitimate free and low-cost ways to improve your credit score—no magic tricks required.

Experian offers a free service, Experian Boost, that allows consumers to add to their credit history payments not traditionally reported to credit reporting agencies, including bills for cell phones, utilities and streaming services.

“They give us permission to access their checking, savings or credit card accounts for those payments and we add those payments to their credit reports,” Experian’s Griffin said. “That is one of the most empowering things we’ve seen for people—it places the choice in their hands.”

People with scores of less than 680 are increasing their credit scores an average of 19 points, Griffin said. (That puts them just within reach of our 700 club.) In general, consumers see an average increase of 13 points, he said.

Experian’s data has shown that adding these payments does not skew credit scores inaccurately, but instead helps lenders identify new customers who are actually good credit risks, Griffin said.

Similar programs include

  • eCredable Lift, which reports your phone and utility payments to credit reporting agency TransUnion for $25 a year
  • Experian RentBureau, which allows consumers to add on-time rent payments to their credit history
  • A free app called Perch, which reports payments for streaming services and rent

2. Lower your credit utilization ratio

Reducing your credit utilization ratio will raise your score. That means paying down your credit card balances so they make up a small percentage of your overall available credit.

“Just because a lender says you can borrow a certain amount, does not mean that you should,” Sechrist said. “You should keep your utilization rates under 35 percent. For example, if your monthly credit card limit is $10,000, then you’d want your balance to be under $3,500 at all times.”

Another way to lower your credit utilization ratio, even if you pay your entire balance every month, is to make your payment early or make an extra payment in the middle of the month, Rossman said.

“Even if you pay your bills in full, you still might have a high credit ratio,” Rossman said. “Your balance is reported on the statement date, so bring your balance down before the statement comes out.”

While it may be tempting to close credit cards you’re not using, think twice—especially if there’s no annual fee, Sechrist said. Those cards can help keep your credit utilization ratio low, and if you’ve had them a long time, help you maintain a long length of credit history.

700 no longer above average, even in the pandemic

Back in 2005, a 700 score would have marked you as above the average, which was 688, according to the FICO blog. Since then, average credit scores have been trending up, but usually only a couple of points a year. From 2019 to 2020, that average score jumped eight points. The COVID-19 pandemic has made both consumers and lenders more cautious.

“Scores have actually improved throughout the pandemic,” Griffin said. “Payments have remained steady. We’ve seen a decrease in utilization rates and a decrease in delinquencies. We’re seeing things continue to be positive.”

Banks tightened standards across all three consumer loan categories—credit card loans, auto loans and other consumer loans—over the first quarter of 2020, on net, according to an April 2020 report by the Federal Reserve.

“In the time of the pandemic, things have changed, but the worst fears have not been realized,” Rossman said. “A year ago, I would have said if you were at 670 or above you could get approved by most credit cards. Now it’s more like 720 or above. A year ago, fears skyrocketed, but the worst fears have not been realized.”

The bottom line

Whether a credit score of 700 is your goal or you’re aiming even higher, keep practicing and building good credit habits. Since average credit scores are trending up, this is one time when you definitely want to keep up with the Joneses.

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How to Make Sense of Your (Dozens of) Credit Scores

There’s your basic score, but there are plenty of others that you don’t know about and will never see

By Penelope Wang

    

A series of 5 red, orange, yellow, and green semicircles indicating credit scores

Back in April, Lanette Andrew needed money to buy equipment for her horse farm in Sherwood, Ore. But she realized she needed to improve her credit score before she applied for a loan.

Like many Americans, Andrew, 54, has seen her income drop during the COVID-19 pandemic. After she missed some bill payments, her score fell from the mid-600s, which is considered barely adequate for getting a loan, to the 590 range, which puts affordable loans out of reach.

To get back on track, Andrew focused on paying down her balances. And she signed up for a credit score monitoring service from the credit bureau Experian, which also gave her scores from Equifax and TransUnion, the other two major credit bureaus. (Cost: $24.99 a month.)

But she discovered that the score information was a bewildering jumble of numbers—with six from Experian alone—that differed by as much as 100 points. The other two credit agencies also provided multiple scores, none of which were the same.

“It’s not at all clear to me why these credit scores are so different, and what I can do to improve them—it’s really frustrating,” says Andrew, who hasn’t applied for a loan because one of her scores is still too low.  

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The Complexity of Credit Scores

Andrew's confusion over credit scores is shared by millions of Americans. Though most consumers are familiar with their primary three-digit credit score, almost 40 percent don’t know they have more than one score, according to a 2019 survey by the Consumer Federation of America.  

MORE ON CREDIT SCORES

How to Protect Your Credit Score During the Coronavirus Pandemic

Secrets to Credit Score Success

How to Get the Best Car-Loan Rate Despite a Low Credit Score

What the Changes in FICO Credit Scoring Mean for You

Why It's Still So Hard to Fix Credit Report Errors

Why so many credit scores? And why are they so confusing? The reasons have a lot to do with the nature of the credit business--including the fact that the three credit reporting agencies work for your creditors, not you.

"The credit scoring industry’s priorities lie with satisfying their customers, which are the lenders, while the consumer’s data is their product,” says Syed Ejaz, a financial policy analyst at Consumer Reports.

Businesses pay Equifax, Experian, and TransUnion to provide them with your credit scores—based on your credit history—to decide whether you're a good credit risk. But a bank uses different criteria than a landlord or utility to determine whether it wants you as a customer. So the credit reporting agencies tailor the information—and your credit scores—to the demands of each business. 

That’s why you have dozens of different credit scores, many of which you don't know about. Your primary credit score is still used in most cases, but businesses often use several credit scores to determine your creditworthiness. The problem is you may never really know.  

“When you add up all the brands and customized versions, each consumer may have more than a hundred different scores, and most of them you may never see or even know about,” says John Ulzheimer, a credit expert who has worked at FICO and Equifax.

The business priorities of the credit industry leave consumers vulnerable to financial harm, advocates say. Because Americans lack full understanding of their credit scores, they’re at a major disadvantage when applying for mortgages or other types of loans.

The credit reporting companies also use credit score data as a marketing hook, barraging consumers with TV ads and email come-ons for credit score updates and credit monitoring programs. That leaves many consumers paying subscription fees for access to a score that may be of dubious value.

Adding to the confusion, the credit industry is marketing new services designed to help you improve your scores. But those programs, such as Experian Boost, may not increase the score you actually need for a particular loan or service.

“There are many other steps consumers should take before signing up for a credit improvement program, such as paying off debts in collection and lowering your use of credit,” says Consumer Reports’ Ejaz.

There are, in fact, several strategies to help you keep tabs on important credit scores as well as improve them, as we explain below. 

What Goes Into Your Credit Score

 

Breakdown of a FICO 8 Score

 

 

Source: FICO

How Credit Scores Work

To get a clearer understanding of the credit score system, here’s a quick recap of the basics. 

Your primary credit score—the three-digit number that indicates your level of creditworthiness—is based solely on the information in your credit report, which is put together by the three credit agencies. That data includes your record for paying bills on time, the size of your credit lines, and the amount you owe in loans, among other items. (For more on understanding your credit record, see “How to Read Your Credit Report.”) 

Under the federal law known as the Fair Credit Reporting Act, consumers can dispute errors and inaccurate information on their credit files. Mistakes can happen frequently, as studies have shown.

But unlike credit reports, there is no federal right to free credit scores, says Chi Chi Wu, staff attorney at the nonprofit National Consumer Law Center. There is an exception: The lender must share the credit score it used if you are turned down for credit or charged a higher rate. 

The credit industry generally offers consumers limited insight into the formulas used to determine their creditworthiness or the number or type of scores that determine their access to products and services. 

“The scoring algorithms are black boxes, and consumers lack information about what they can do to improve their scores,” says Marvin Owens, senior director for economic programs at the NAACP. 

Credit scores can also reinforce the financial hurdles faced by those with low incomes, particularly Black consumers and other consumers of color, says Owens. Although the scores themselves are based strictly on the credit reports, some long-standing financial practices—such as charging higher auto loan rates or restricting mortgage lending to populations in certain neighborhoods—tend to disproportionately hurt the credit scores of Blacks and Hispanics, studies have found

FICO, also known as Fair Isaac Corp., provides the algorithm, or mathematical formula, that credit reporting agencies use to calculate your credit scores. FICO 8 remains the most commonly used score, and it’s the one you often see pop up on your bank or credit card online account. (You can see a breakdown of the FICO 8 formula in the chart above.) But FICO 8 is only one of 28 scores that FICO discloses, according to Tom Quinn, vice president of myFICO. 

VantageScore, a joint venture formed by the three major credit bureaus, is also used by many lenders, sometimes in addition to your FICO score. You can often find your VantageScore available for free through financial services or credit score websites. 

Focusing On the Scores That Matter

Given these various brands and scoring formulas, it’s unlikely that a consumer will ever see the exact same score that the lender is using to make a credit decision.

“Even if you both are looking at the same formula and brand, your credit data is likely to vary from day to day, producing a different score,” says Rod Griffin, senior director of consumer education and advocacy at Experian.

Some of the biggest differences may crop up when comparing your base FICO 8 score to a FICO mortgage score. Mortgage lenders use older FICO formulas, which are required for mortgages sold to Fannie Mae and Freddie Mac, the government-sponsored entities that purchase most residential home mortgage loans.

These older FICO scores used in mortgage lending will weigh some factors more heavily or lightly than the newer scores. For example, if you have debt collection accounts with zero balances, they won’t be counted by more recent scoring formulas. But under the mortgage score formulas, they will be considered, says Ulzheimer.

When it comes to credit card or auto loan scores, the FICO formulas are adjusted for factors designed to be more predictive for risk in those transactions. Your history of repaying previous auto loans counts in your auto score, while bankcard scores focus on credit card accounts. (More on the key credit scores can be found in the chart below.)

You probably won’t be able to find out in advance which bureau lenders will tap for your credit score. Many lenders also employ customized formulas when making their credit decisions. But for mortgages, it’s more straightforward—lenders will pull your FICO score for mortgage lending from all three bureaus, which are included in a single document called a tri-merge credit report.

Consumers can get access to 28 FICO credit scores, including those from the major credit bureaus and auto and bankcard industry specific scores, at myFICO.com, FICO’s consumer website. (Cost: $19.95 a month and up.) 

If you’re in the market for a loan, seeing these scores could be helpful as a rough gauge of creditworthiness. But for most consumers, it’s not necessary to monitor all your available credit scores.

“You can probably get a good general idea of your credit status just by looking at your base score,” Griffin says.  

Key Credit Scores

 

TYPE OF LOAN

TYPE OF SCORE

WHERE TO FIND IT

General
Credit

FICO 8, 9
VantageScore 3.0

Free through many banks, credit card issuers, and websites

 

Mortgage

FICO 2, 4, and 5

Free in mortgage documents or for a fee at myFICO.com

 

Auto
Loan

FICO Auto
Score 2, 4, 5, 8

For a fee at myFICO.com

 

Credit
Card

FICO Bankcard
Score 2, 3, 4, 5, 8

For a fee at myFICO.com

Note: FICO recently released FICO 10 and 10 T versions. VantageScore has released a 4.0 version.

Credit Score Improvement Programs

For consumers with thin or subprime credit histories, new options are cropping up that claim to help you improve your scores.

Experian Boost is a free service that counts your utility payments toward your Experian FICO Score. You give Experian read-only permission to connect your bank account or credit card, and see the eligible utility and telecom accounts you select to then add your phone, utility, and streaming services payments to your billing history.

Experian Boost includes only your on-time payments. You can turn off the service at any time.

UltraFICO—a new credit score—is still in the pilot phase. (You can sign up to be alerted when it rolls out.) In addition to traditional credit bureau data, this score also looks at your banking history to determine how well you manage your money, using measures such as the amount you keep in savings and whether you bounce checks. Consumers can determine which alternative data to include.

One new service, eCredable Lift, allows you to add utility and phone payments to your TransUnion credit report. (Cost: $24.95 a year.) Unlike Experian Boost, eCredable Lift reports both positive and negative data. This means the participant needs to stay current on their payments to benefit their score. Late payments will harm their score.

“Lenders are more likely to consider payments reported by eCredable Lift due to the completeness of the reporting, even though it requires the participant to opt-in to share these accounts,” says Steve Ely, CEO of eCredable.

You should also expect only modest gains to your score—Experian Boost customers see 13-point increases on average, according to Griffin. For some consumers, however, that could be enough to move you into a higher credit score level.

While these programs could be helpful, be aware that you will be giving up personal information to the credit bureaus, says Wu of the National Consumer Law Center.

You also need to realize that the scores that could be improved may not be the same scores considered by your particular lender, who may use a different scoring formula or pull your credit history from a different bureau. Because of the requirement to use older scoring formulas, mortgage lenders will not consider scores from these programs, Ulzheimer says.

Some consumers have also had difficulty connecting their bank or utility payments to these programs. Oregon horse farm owner Andrew has struggled for several months to get her cell phone and utility payments counted by Experian Boost.

“Two customer reps promised back in April that the payments will be processed, but it hasn’t happened,” Andrew says.

Experian spokesperson Sandra Bernardo responds that the balance on Andrew’s Experian credit report was from “the most refreshed report.” But Andrew remains dissatisfied.

How to Improve Your Credit Score

Although there’s no quick fix to a poor credit score, taking these basic steps can help improve those numbers over time.

Check your credit report. This report is the foundation of your score, so make sure the information is accurate. Normally you can get one free credit report from a different reporting agency each year, which you can space out every four months to ensure regular updates. But because of the pandemic, you can request weekly reports from all three agencies through April 2021. Still, most people need to look at their reports just once a year, Wu says.

It’s best to go to AnnualCreditReport.com when requesting your report, says Leonard Bennett, a consumer litigation attorney in Newport News, Va. If you instead request your report from one of the major credit bureaus, you may be subject to forced arbitration, which could limit your ability to take legal action in the event of problems or errors in your files, Bennett says.

Dispute any errors. If you spot a problem, such as an incorrect address or unrecorded bill payment, file a dispute promptly. You can do this online, but consider mailing in the form, with return receipt requested, to have a record of the dispute, says Wu.

You may need to be persistent. By law, the credit agencies are supposed to have 30 days to respond, but the Consumer Financial Protection Bureau has said it will not enforce (pdf) that deadline during the pandemic because of staffing challenges at the credit bureaus.

Consumer advocates recently urged the CFPB to enforce the deadline, noting that consumer complaints about delays in resolving disputes have soared in recent months. But so far the CFPB has not changed its policy. The CFPB did not respond to a request for comment.

Stay on top of your finances. Two steps alone—making timely payments and minimizing your use of credit—will go a long way toward improving your credit score. Those two factors alone account for 65 percent of the FICO 8 score, says Ted Rossman, industry analyst at CreditCards.com.

If you’re having trouble managing your debts, consider getting help from a nonprofit credit counseling agency. You can find one at the National Foundation for Credit Counseling.

Plan ahead if you’re borrowing. If you’re looking to take out a loan, be careful to avoid moves that could hurt your credit score. Applying for a new credit card, for example, could result in a hard inquiry on your credit report, which is likely to ding your score.

It also makes sense to avoid closing credit card accounts. That would reduce your available credit, thereby raising your utilization rate, another factor that could hurt your score, says Rossman.

Once you’ve secured your loan, you can feel free to reshuffle your accounts. With good credit management, your score will eventually rebound.

 

Penelope Wang

I cover everything from retirement planning to taxes to college saving. My goal is to help people improve their finances, so they have less stress and more freedom. What I enjoy: walks through the city, time with family, and reading mysteries, though I rarely guess who did it. Follow me on Twitter (@PennyWriter). 

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How to Self-Report to Credit Bureaus

Ryan Haar

March 31, 2021 | 6 MIN READ

 

Photo to accompany story about how to self report to credit bureaus.Getty Images

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

The pandemic and economic recession pushed lenders to be tighter and more selective with loans and lines of credit in 2020.

For those looking to borrow, every little bit counts when it comes to getting access to the best interest rates and terms. Could self-reporting more financial details to the credit bureaus be an easy win? 

Rent, utilities, and even Netflix payments can all go toward helping your credit score. Before you decide whether it makes sense for you, here’s what you should know:

What Is Self Reporting?

Describing it as “self reporting” is a bit deceiving, because an individual cannot actually contact the credit bureaus directly to report credit information or payments. 

Self reporting refers to giving the credit bureaus (ExperianTransUnion, and Equifax)  permission to view your accounts and payment history for things that are not automatically reported. This process still involves the use of some third-party service as individuals themselves cannot report directly. 

Before considering self reporting, it’s important to remember what information is already reported to the bureaus. Loan payments are reported automatically: student loans, auto loans, personal loans, mortgages, and most credit cards. 

PRO TIP

Find out what payments are already being reported to the credit bureaus by pulling your credit report. Due to the coronavirus pandemic, you can now do it for free through 2021.

“Chances are your general credit card should report, but sometimes you get these niche credit cards that may not,” Ted Rossman, an industry analyst at CreditCards.com, says. “When in doubt, pull your credit report” to check and confirm exactly what accounts are being reported and included. You can usually check your credit report for free once per year, but in light of the pandemic you can do it for free weekly through April 2021. 

After you’ve determined what’s already being reported, consider what other payments you make consistently and often that could benefit your credit if they were considered by the bureaus. 

Reporting Your Rent

Rent is the biggest monthly expense for many households and “it’s unfortunate that it’s typically not counted,” Rossman says. But there are some measures you can take to ensure this expense helps your credit. 

There are several programs available that will report your rent to credit bureaus. Rossman points to a few of the more popular programs when considering how they might be able to help people:

  • Experian RentBureau: Experian RentBureau is free, and reports only to Experian. 
  • Rental Kharma: Rental Kharma reports to TransUnion and Equifax, and has a $50 startup fee and a $8.95 monthly fee
  • Rent Reporters: Rent Reporters reports to TransUnion and Equifax, and has a $94.95 sign-up fee with a $9.95 monthly fee after that. 
  • LevelCredit: LevelCredit charges $6.95 per month and reports to TransUnion and Equifax.

Renters must sign up for a service, then the company will reach out to the landlord every month to confirm the tenant paid on time, usually via an email or text message. This system requires “some commitment from your landlord,” Rossman says, but shouldn’t discourage you from trying. 

If your landlord doesn’t cooperate and properly report your rent payments, you may be penalized, so make sure they have a clear understanding about what’s expected from them  before you sign up. And if you can’t get a commitment from them to partner with you, you’re probably better off working to improve your credit in other ways.

If you want to ask your landlord to cooperate and help you self report your rent, here’s a script you can use as a starting point for an email or conversation:

 

Hi ______,

 

I’ve lived in your property/building for_________ months, and always pay my rent on time. I would like this to reflect favorably on my credit score as I’m looking to build my finances. 

 

I’m signing up for _______ service to report my rent payments to credit agencies. I’ll pay the monthly fee, all you would have to do is answer the email/text once per month confirming that I’ve paid rent on time. It’s very minimal work on your part and would help me out a lot! 

 

Let me know if you have any questions I can answer for you. 

 

Thank you,

 

____________. 

Other Credit Builders

Credit builder products work to increase your positive payment history by including recurring payments that aren’t automatically reported.

Experian Boost

Experian Boost factors utility payments into your credit report. This means if you pay your water, electricity, cellphone, internet and natural gas bills on time, you can help your credit with Experian Boost. Experian Boost also includes Netflix payments. 

“Experian Boost is a no-brainer,” Rossman says of the free service. “You can opt in and then if it doesn’t work, you can opt right back out.”

eCredable Lift 

eCredable Lift by TransUnion adds 24 months of utility payment history to your credit report by accessing your utility accounts directly. It costs $24.95 per year. 

UltraFICO Score

UltraFICO Score includes more than just utility payments. It accesses your banking history for data such as your savings balances, length of account history, and frequency of transactions.

Be Mindful of Your Financial Goals

It’s important to keep your financial goals in mind when actively building your credit. What are you working for? When people talk about building their credit, a lot of times it’s to eventually get a mortgage. 

“That’s the aspiration,” Rossman says. “A lot of times the mortgage is the holy grail.” 

If that’s the case, it’s important to keep track of which bureaus your self-reporting services are reporting to. If your services are only reporting to one of three bureaus, “that wouldn’t really help you so much,” Rossman says. 

The best case, assuming all of your payment history is accurate and positive, would be for your services to report to all three bureaus. When you apply for a mortgage, typically they’re going to look at the middle of your three scores. 

“It’s like Olympic diving. They’re going to throw out the high score, throw out the low score, and look at that middle score,” Rossman says.

While reporting to all three bureaus is ideal, it’s more common that a self-reporting service will only report to two out of three. In general, “the more the merrier,” Rossman says. 

It’s also important to consider the cost of these credit-building tools, which, for some, are not insignificant. But if the goal is that mortgage, then a few points difference in your credit score could make a significant difference in your rate, Rossman says. 

Even a few extra points can be really beneficial, and the average user of Experian Boost, for example, gets 13 points, according to Rossman. 

“Especially if you’re on the margin of getting approved or unapproved, that boost can be really significant,” Rossman says. And you can always stop paying for the extra reporting services after getting a mortgage.

But if a mortgage or other big loan is not in your near future, then weigh the cost versus the benefit of these tools carefully. And remember, the most surefire way to build and maintain your credit history is to simply make on-time payments to existing loans and credit cards.

Bottom Line

Lenders have gotten a lot stricter. It’s harder to get a new line of credit now than it was six months ago, so “anything you can do to truthfully improve your score is really worth it,” Rossman says. 

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Big Banks May Offer Credit Cards to Consumers With Little Credit

The new program would give lower-income Americans an alternative to payday loans

By Penelope Wang

    

Illustration of a person holding a large credit card.

Americans with little or no credit history may soon be eligible to get a credit card from some of the nation’s biggest banks.

A group led by JPMorgan Chase is working on a pilot project to offer credit cards to customers based on how well they manage their bank account rather than their record of paying back loans and other debts. 

The program could offer an alternative way for lower-income Americans to borrow money instead of using so-called payday loans, which charge high interest rates to those with little credit. It could also help customers establish a credit history, so they could be eligible for other types of borrowing, such as a home mortgage.

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More than 50 million Americans currently have little or no credit history, a group called credit invisibles. Many in this group are Black and Hispanics, according to data from the Consumer Financial Protection Bureau (PDF).

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Under the program, banks would analyze their customers’ deposit account information rather than credit scores to determine whether they’re likely to be financially responsible.

JPMorgan is expected to be the first bank to offer credit cards to applicants using this alternate method. Consumers may be able to apply for these cards as early as the fall, and the data would be reported to all three credit bureaus. The bank is not yet releasing any details about credit limits or interest rates.

This initiative emerged from a meeting held by the Office of the Comptroller of the Currency, the federal bank regulator, which convened industry leaders and nonprofit executives to develop programs for increasing credit access to disadvantaged communities.

Other financial institutions have already launched programs aimed at helping consumers who’ve been shut out of the credit system. But those programs have mostly been niche offerings, says Ted Rossman, senior industry analyst at CreditCards.com, a credit card comparison website.

“It will be harder for big banks like Chase to move the needle in this market, but it may help banks reach new, loyal customers with cross-selling potential,” Rossman says.

Consumer Privacy Concerns

Consumer advocates are taking a cautious view of the initiative.

“The credit card offering may help some consumers who don’t have a credit score, but we don’t have enough details on how these programs will work,” says Syed Ejaz, policy analyst at Consumer Reports.

Ejaz says the sharing of financial data among the banks raises privacy concerns, particularly with regard to how those with a poor credit history are labeled. Using deposit-level data may also highlight the impact of overdraft fees, which often hit low-income consumers hardest.

“While this effort does help inclusion and is better than no effort, there are some downsides,” says Chi Chi Wu, a staff attorney at the National Consumer Law Center who specializes in credit issues.  

Most significantly, Wu is concerned that the program does not offer enough control to consumers whose cash flow data would be available by default to underwriters.

Some advocates would prefer an opt-in option allowing users to choose whether they want to give underwriters access to their banking data.

Building a Credit Score

There are options now for consumers to get credit cards and build a credit history, though the process generally takes time.

So don’t wait for the big banks to establish a credit history or improve your score. You can check into one of the programs mentioned above, or follow this advice from experts.

For access to credit cards, consider Petal and Tomo, which already use alternative data, such as bank account records, for those with no credit history.

Credit companies also offer credit-building options using alternative data. Experian Boost counts your utility payments toward your Experian FICO Score. Another program, eCredable Lift, allows you to add utility and phone payments to your TransUnion credit report.

But for those unfamiliar with credit, you need to take extra care in managing your accounts to ensure on-time payments and avoid dinging your score, says John Ulzheimer, a credit expert. The last thing you want is to further derail your access to credit.

—Octavio Blanco contributed to this article.

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To get a low mortgage rate, your credit score matters. Here’s how to boost it

Michelle Fox@MFOXCNBC

 

Shot of an attractive young couple moving house

 

If you are in the market for a new house, you may be overlooking one key to your success: your credit score.

That three-digit number has a direct impact on your ability to get a mortgage and what interest rate you will pay.

Mortgage rates are at two-month lows, with the benchmark 30-year fixed loan at 3.11%, according to Bankrate. On Wednesday, the Federal Reserve announced it will continue to keep short-term interest rates at near zero, which means mortgage rates should stay low.

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To get that low rate though, you’ll have to have a good credit score.

“Even a quarter-point or half-point can make a really big difference over the long haul on a large loan amount,” said Ted Rossman, senior industry analyst at Bankrate and CreditCards.com.

Credit scores range from 300 to 850. A good score is 670 to 739, very good is 740 to 799, and 800 and up is considered excellent, according to FICO, a leading credit-scoring company.

Homebuyers who took out mortgages in the fourth quarter of 2020 had a median score of 786, according to the Federal Reserve Bank of New York.

If you don’t measure up, it doesn’t necessarily mean you are shut out of the market. You can take several moves to improve your score.

First, check your credit history

You are allowed one free credit report a year from the three main credit-scoring companies: Experian, Equifax and TransUnion. You can reach out to each directly or you can access them through annualcreditreport.com.

Not only should you know your score, but you should also make sure there are no mistakes or unintended skeletons in your closet, like a missed payment you forgot about.

Pulling your report before you apply for a mortgage or preapproval, ideally a few months in advance, will give you time to correct any issues.

Pay bills on time

Late or missed payments can knock down your score.

The easiest way to avoid that is to set up automated payments for your bills, said Faron Daugs, founder and CEO of Harrison Wallace Financial Group.

Lower your credit utilization ratio

Woman using her smartphone and credit card for online shopping

Lenders will look at whether you have high balances on credit cards.

Even if you pay your credit card bills in full each month, you may still have a high utilization rate, Rossman pointed out.

For example, if you make $3,000 in purchases and have a $5,000 limit, you are using 60% of your available credit. Try to keep it below 30%, Rossman said. Those with the best credit scores keep it below 10%.

Making an extra payment in the middle of the billing cycle can help knock the balance down before the statement comes out.

Become an authorized user on someone’s credit card

If you have no credit, one of the best ways to start building it is becoming an authorized user on someone else’s card, said Daugs.

“Make sure you do it with someone with good credit,” he cautioned.

If the account stays in good standing, that will positively impact your credit.

Get a credit-builder loan

Some community banks and credit unions offer credit-building loans, which are designed to help the holder build credit as they make payments.

You’ll pay interest, although some lenders may reimburse the costs after the loan is repaid.

Alternative credit scoring won’t matter

Experian Boost can bring up your credit score on Experian by counting phone, utility and streaming service bills.

You can boost your credit with alternative solutions, which count bills that don’t normally go onto your credit report. However, they may not work for government-backed mortgages.

Experian Boost can bring up your score on Experian by counting phone, utility and streaming service bills, while eCredable Lift reports utility and phone payments to TransUnion. Perch allows you to boost your score with recurring expenses such as subscription services and rent.

The newer platforms use a newer version of the FICO algorithm, Rossman said. Government-backed mortgage companies Fannie Mae and Freddie Mac request older versions, so they won’t see the score improvement.

Don’t rock the boat

If you are looking to purchase a home, hold off on any other big-ticket items, like a car. Also, don’t open or close any credit cards until after the mortgage is approved, Rossman suggested.

“It is a sensitive time in your financial life,” he said. “Lenders don’t want to see anything weird.”