When applying for a credit card, or any other account that requires credit history, the issuing creditor will likely pull a credit report to determine if you’ll be a good borrower. If you have little or no established credit, many creditors will deny you financing until you’ve got enough credit history to prove your credit worthiness.
Establishing your first credit account is the hardest, as the potential creditor has little or no history at their disposal to determine whether you’ll be a sound borrower or not.
The easiest way to establish credit is through a credit card with your primary banking institution. (Learn more about how to build credit history).
Not All Accounts Are Recognized by Credit Bureaus
- Gas cards
- Department store cards
- Authorized user accounts
- Credit cards from small credit unions
Although you might be making a good effort to build positive credit history, the credit bureaus may not always recognize all of your credit-based accounts.
Certain credit accounts such as gas cards, department stores cards, authorized user accounts, and credit cards from credit unions may not show up on your credit report, and because of this lack of information, your credit scores may be inaccurate or potentially non-existent.
Additionally, utility bills and cell phone plans also don’t tend to pop up on credit reports, and therefore do not benefit your credit score or credit history.
This is obviously a problem if you have limited credit and want to get the ball rolling in that department.
For the record, creditors are not required to report your account information per the Fair Credit Reporting Act (FCRA), so this might explain why the information is missing from your credit report.
And even if they do report it, they may only report data to one or two of the three credit bureaus.
Adding Items to Credit Report Can Boost Credit Scores
By adding missing credit accounts to your credit report, you can boost your credit depth and effectively establish or raise your credit score.
Assuming these missing accounts are in good standing with minimal amounts of debt, you can make a request to add them to your credit report by calling the creditors or the credit bureaus directly. They aren’t obligated to add the accounts, but it’s worth a shot to ask.
Don’t add accounts that are in bad standing or riddled with debt. It’s a blessing if they aren’t included on your credit report!
The credit bureaus may honor your request, although they may charge you a small processing fee and ask that you send them documentation. Be diligent and only work with the credit bureaus directly. Many third party companies will charge you an arm and a leg for similar services.
Once missing accounts are added to your credit report, you’ll have greater documented credit history, which should drive your scores upward. If you had an “insufficient credit file” or “no credit file” in the past, these added accounts should give the credit bureaus enough information to issue you a credit score.
And a credit score, coupled with a more complete credit profile, will allow you to apply for more credit, which should help you build a stronger credit history over time.
Tip: Before applying for a certain credit account, ask the creditor if they report data to the credit bureaus to ensure you’ll actually get credit for it. This is probably much easier and efficient than attempting to add missing data to your report after the fact.