Are You a Credit Ghost? Here’s How to Come Back to Life

by NerdWallet | In Financial Empowerment | 31 October 2017 | Updated on: July 22nd, 2020

Building up your credit score can be tough—especially if you’re an international student. If you haven’t lived in the U.S. before, it’s difficult to establish yourself with credit bureaus (thankfully, having a U.S.-based student loan—like one from MPOWER—can help). Below, Nerdwallet explains the importance of building credit.



Credit holds the key to much of modern life. Even if you prefer using cash, having good credit can save you money on insurance or loans and give you more choices when shopping for apartments or cell phone plans. Credit cards can help you cover emergencies and are all but essential for making travel reservations.

And when your name is on a credit account, credit bureaus receive reports about your account activity. The bureaus build your credit reports, and when enough data accumulates, you’ll have a credit score.

But millions of U.S. adults don’t have enough activity to produce credit reports or scores. When it comes to the credit industry, they might as well be ghosts.

Who is ‘credit invisible’ and who is ‘unscored’?

The Consumer Financial Protection Bureau examined 2010 data and found about 11% of the U.S. adult population, or 26 million people, had no credit report at all — they were “credit invisible.”
An additional 19 million people, or 8%, were termed “unscored.” They had credit files, but the data was too sparse or too old to produce a credit score.

Between the two, that’s almost 1 in 5 U.S. adults, including:

  • Young people who are just starting out and haven’t been able to qualify for credit
  • Those who stopped using credit — for instance, older people who’ve paid off their home and car or people who prefer using cash
  • Americans living abroad who did not keep their U.S.-based credit accounts active

Just starting out? Get on the credit radar

Credit newbies will find it’s hard to qualify for credit without a history of using it.

There are ways to start building credit, though:

Authorized user status: Ask a family member or friend who has a good payment history to add you to his or her credit card account. Make sure the issuer reports authorized users’ activity to at least one credit bureau. That might be enough to get your credit file started.

Secured credit card: You must pay a deposit, and often an annual fee, but these cards are easier to get because your deposit reduces the lender’s risk. Use one as a steppingstone to a standard card.

Credit-builder loan: You take out a loan, but you don’t receive the money until you’ve completed the payments. If you pay on time and in full, you build a positive credit history.
Combine methods for best results; using a secured card and a credit-builder loan together is particularly effective.

Tip: Be sure to pay credit accounts on time. That’s the top factor in your credit scores

Have a thin credit file? Become scorable

To have a FICO score, you must have a credit account that was active within the past 6 months. Its competitor, VantageScore, looks back 24 months for activity.

If you have a credit card but not much payment history, build your file by using the card lightly and paying on time. You don’t have to carry a balance to generate a credit score. Pay in full each month to avoid interest.

If you don’t have a card, try the credit-building methods outlined above: authorized user status, secured card or a credit-builder loan.

Tip: Use just a small portion of your credit limit — no more than 30% and preferably less. Credit utilization is the second biggest influence on scores.

Have a stale file? Freshen it up

To ensure you have continued access to credit, keep using your credit cards lightly. Consider sending a small, recurring charge to each card, such as your cell phone bill or Netflix subscription, and set up autopay so you never pay late.

Tip: Keep your oldest cards open unless there’s a compelling reason to close them, such as high fees. The length of your credit history also influences your scores.

Once you’re on the radar, protect your credit

Review your statements carefully for suspicious activity. Even better, set up alerts or regularly check accounts online to catch problems early.

You’re entitled to a free report every 12 months from all three major credit reporting bureaus by using Check all three and dispute any errors you find.

Then sign up for a free credit score and report source; many personal finance websites, such as NerdWallet, offer them. Any unexplained change could signal an error or identity theft. And the sooner you address those, the better.


Bev O’Shea is a writer at NerdWallet. Email: Twitter: @BeverlyOShea.
The article Are You a Credit Ghost? Here’s How to Come Back to Life originally appeared on NerdWallet.


Are you in the market for a student loan? You can check your MPOWER eligibility here.

Author: View all post by NerdWallet

Submit a Comment

Your email address will not be published. Required fields are marked *

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

2022 © MPOWER Financing, Public Benefit Corporation NMLS ID #1233542. 1101 Connecticut Ave NW Suite 900, Washington, DC 20036