April 22nd, 2018 7:05 AM by Jackie A. Graves, President
Your credit history can determine if you can get a loan, and even where
you live or work. Credit scores are built from your credit history and can
determine how much you pay to borrow money for a car or house. Yet, many people
don’t know where to start when it comes to building, improving, or protecting
their credit history. Three common credit problems are:
Lack of enough credit
Denied credit application
Fraud and identity theft
Below are some tips on how to deal with these issues.
1. Lack of enough credit history
Many people may not know that having no credit history, or a limited
credit history, can create issues similar to having negative information in
your credit history. If you don’t currently have a credit history, you’re not
alone. One in ten adults experience "credit
invisibility," meaning they do not have any credit history with one of
the three nationwide credit reporting companies. Many more don’t have enough of
a credit history, sometimes referred to as having "thin" credit, to
generate a credit score. People with thin or no credit history may find it
difficult to apply for a loan or rent an apartment.
What you can do:
Take action to help build your credit history responsibly. There are a
number of products considered helpful in establishing or rebuilding credit
histories, and they provide you with the opportunity to practice making on-time
payments that are reported to the credit reporting companies. These may include
secured credit cards, credit builder loans, or retail store credit cards.
Use our Building
credit from scratch checklist to learn more about these and other ways to
build your credit history.
2. Denied credit application
If you’ve been denied an application for a loan or line of credit, there
are steps you can take to improve your credit score or dispute inaccurate
information on your credit report.
Find out why your application was denied. If a lender rejects your
application, they are required under the Equal
Credit Opportunity Act (ECOA) to
tell you why your application was rejected or tell you that you have the right
to learn the reasons if you ask within 60 days.
If you were denied due to an "insufficient credit file," you can
use this checklist
to learn how to build and keep good credit.
If a lender rejected
your application based on your credit report, they must provide specific
information about why your application was rejected or tell you that you have
the right to learn more about why you were denied if you ask within 60 days.
your credit reports. Make sure the information in your credit reports is
accurate. If you find errors, take steps to correct them.
your credit history with a few best practices, such as paying your bills on
time and limiting your credit use to no more than a third of your credit limit.
3. Fraud or identity theft
theft occurs when someone uses your name, Social Security number, date of
birth, or other identifying information, without authority, to commit fraud.
If you think you’ve been a victim
of fraud or identity theft, there are several steps you can take to protect
your personal information from being misused. These steps include:
Reviewing your credit
reports each year to make sure they contain only information about you
any inaccurate or suspicious information on your credit reports
Placing a fraud
alert or security
freeze on your credit reports
Consider signing up for identity
monitoring or credit
monitoring services. Some of these services are free, and others cost
money. If you’re considering these services, be aware that there are other free
and low-cost services to protect consumers, including a security freeze or
If you are considering signing up for identity or credit monitoring
services, make sure you fully understand the terms and conditions related to
trial periods, fees, cancellation requirements, and other conditions so that
you don’t face unexpected fees, charges, or other limitations.
If you were impacted by the Equifax data breach, we have additional
information on the steps
you can take to respond when your personal information is exposed in a data
Building or rebuilding your credit will take time and planning. The steps
above can guide you on your journey.
If you want more help, consider talking to a credit
counselor. Most reputable credit counseling organizations do provide free
educational materials and workshops, though some do not. Building or improving
on your credit won’t happen overnight. Anyone who claims to be able to do this
for you may be scamming
To learn more about credit reports and scores, check out our tips
and frequently asked questions.
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