Being “credit invisible” in Utah means lacking an adequate credit history with one of the top credit bureaus in the United States. If you are in this position, you are automatically at a disadvantage when applying for loans.
Since traditional lenders rely on consumer data provided by credit bureaus, you have little information to prove you are a low-risk borrower. Here are effective ways to get out of your “credit invisible” status:
Take Out Unconventional Loans
Savvy consumers put a premium on regular ATV tune-ups in South Jordan and routine motorbike maintenance in Salt Lake City because of title loans.
These secured loans allow the use of a motor vehicle as collateral without surrendering it outright. Instead, you can leave the title to the lender until the loan is repaid completely.
Detractors warn against applying for a title loan, for it comes with eyebrow-raising interest. However, it is one of the most convenient financing options for individuals with bad credit.
How does title loan lending help you overcome your credit invisibility? Two words: credit building. Believe or not, not all title loan lenders want you to be their customer forever.
Many of them will report your payment data to credit bureaus themselves to help improve your credentials so that you can qualify for more favorable loan conditions in the future.
Be a Punctual Renter
If you ever wish to buy a house someday, being an outstanding renter can help you attain home ownership more quickly.
Rent is not a debt per se, but it can also improve your creditworthiness if you pay it on time all the time. Unconventional lenders (and some traditional financial institutions) go extreme lengths to scrutinize a borrower’s rental payment history to make a more informed credit decision.
To document your rent payments, though, you might need to subscribe to a particular service first, like Rental Kharma or RentTrack, for a small fee.
Also, you need your landlord’s cooperation to report everything. Without proper verification from your landlord, you might not be able to record all of your rent payments.
Use Your Checking Account to Maximum Effect
Traditional banks, credit unions, and finance companies usually want to know the balance in a borrower’s checking account to see if there are have enough cash reserves and if they are seasoned accordingly.
However, unconventional lenders can also analyze how you receive and spend your money to paint a more accurate picture of your financial health.
It pays to be more particular about your average deposit, the number of deposits made every month, and the bills you pay with your checking account.
Work with Fintechs
Most importantly, apply for a loan from a company that uses all of the said alternative data sets. Fintech lenders do things differently, and they do not rely heavily on credit bureaus. Instead, they develop and use innovations to serve credit invisibles like you.
As a result, fintechs dominate the personal loan market share now, growing their market share from 5% in 2013 to 38% in 2018.
Credit invisibility is slowly becoming less of a concern because of advanced technology and forward-think financial institutions. But then again, you still need to do your part and take the initiative to beef up your qualifications in every way you can.
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