Are You 'Credit Invisible'? Here's How to Build Your Credit Score

Around 11% of U.S. adults have no credit score. If you're one of them, here's what you need to do.

Having a good credit score is really important -- and recent research from The Ascent shows the average American has a pretty good one. But while the average FICO® Score hit 704 in 2018, there are still millions of Americans who don't have the credit they need to be able to borrow. 

In fact, a surprising number of Americans are considered "credit invisible," which means they have no record with the major credit reporting agencies and no credit score can be generated.

Having no credit record can make it difficult to rent an apartment, get a credit card, or borrow money for big purchases. And it can lead to the use of expensive non-traditional forms of credit such as payday loans.

If you're a credit invisible, you don't have to stay that way forever. There are some simple things you can do to help you build your score. 

How many Americans are credit invisible?

The Ascent's research found that as many as 26 million consumers in the U.S. have no record with credit reporting agencies and so are considered credit invisibles. This is about 11% of the adult population of the United States.  

The same research showed that a further 19 million consumers -- about 8.3% of all adults -- in the U.S. have a record with the major credit reporting agencies, but their credit record is too thin to receive a credit score.

How can you build your score if you're one of them?

Unfortunately, being credit invisible can be a big problem as many companies check your credit -- not just lenders. Auto insurers, landlords, cell phone companies, and utility companies all review your credit history when deciding on the terms of doing business with you. And some employers do a credit check too.

If you have no credit history, these companies and individuals don't have an easy way to tell if you're trustworthy and likely to stick to your financial commitments. They may be less likely to rent you an apartment or may charge you a higher deposit to get connected to water and electricity. 

The good news is, developing a credit record isn't hard. You just need to start by building a payment history. 

The easiest way to build a payment history is to get a credit card. And while you may have difficulty getting a traditional card, there are plenty of secured cards out there you can start with. A secured card requires you to put down a deposit equal to your credit limit. You can then make small charges on your card and pay them off in full each month. Your credit transactions will be reported to the credit reporting agencies and you'll develop a credit record that -- over time -- enables the credit reporting agencies to give you a score so you'll be invisible no more. 

Store cards may also be easier to qualify for and can also help you to develop that all-important credit history. Try applying for one at your favorite store, making periodic small purchases with it, and paying them off right away. 

You could also ask someone in your life who has good credit to cosign for a credit card or a loan for you. This would enable you to get approved and get your credit history started. Asking a loved one to add you as an authorized user to one of their credit cards would work too. This would enable the account to be listed on your credit history, even though you wouldn't be responsible for paying the credit card bill.

Getting credit will open up your credit report. Then, you need to make sure you exhibit responsible borrowing behavior by keeping your credit balance low (try to use less than 30% of your available credit) and always paying your bills on time. 

You don't have to be credit invisible anymore

If you don't want to be credit invisible any longer, the tips above can help make sure you build a positive credit history so lenders will be eager and willing to do business with you. Get started ASAP because it takes time to build credit. Now is the perfect time to stop living in the shadows and make sure you're seen.