No Credit On File
Having a low credit score can be stressful, but imagine having no score at all.
Having a low credit score can be stressful, but imagine having no score at all. It's the case for 26 million American adults, who are considered to be credit invisible, according to a report from The Consumer Financial Protection Bureau. What does that mean? It means that one in 10 adults don’t have a credit history (i.e. no report, no score). And an additional 19 million adults have files so thin that they're virtually unscoreable. Although, as Yahoo Finance reports, it is possible to get by without credit, but it's not easy and it's certainly not cheap. As you're working to build your score, here's what you can do to get by in the meantime:
Mortgages. If you're looking to buy a new home without credit, then you better have a ton of cash on hand. That's because in order to qualify for an FHA loan; you usually have to have at least one months worth of your income saved up, after subtracting the down payment and closing costs. In addition to having the green, you can't have any missed payments (i.e. rent, cellphone and utilities), because considering your credit standing (or lack there of), you're more likely to get dropped for having any account over 30 days past due.
After getting approved for the FHA loan, you then have to win over a bank or mortgage servicer. Your best bets are credit unions and community banks, which are usually more flexible and are willing to consider your favorable factors (i.e. strong job history or sufficient funds in the bank) in lieu of your credit. Final note: You can increase your likelihood of getting approved by promising a sizable down payment (think: 20% or more).
Cellphones. Did you know that cellphone companies tap into your credit? They'll run credit checks on you before approving you for a phone plan. No credit history doesn’t mean you won’t get the dial tone, but your plan options might be limited to one- or two-year contracts that require you to put more money down upfront in the form of a security deposit (which most carriers return after 12 months of good behavior). Another option is a prepaid phone, but that can also mean more money upfront.
Cable. This is the easiest of the three. Cable providers; like Dish and Comcast; both offer prepaid cable plans with no credit check required. Or, you can cut the cord completely, and watch TV using one of the many streaming services on the market: Netflix, Hulu, Sling TV or PlayStation Vue.
Article written by Jean Chatzky for SavvyMoney