Awhile back, we shared this article explaining the problem of credit “invisibility” that millions of Americans experience. These individuals have done a great job of avoiding debt, but as a result they do not have a three digit credit score–and without these three digits, they are ineligible for home loans, car loans, and other essential forms of financial assistance. Interestingly enough, one of the founders of Rental Kharma, Bill Butler, was one such individual. Prior to working in the credit industry, Bill had been avoiding credit entirely, not wanting to hamper his financial future with unnecessary debt. Bill’s story is a testament to the difficulty that credit invisibles face, as well as the hope that rent reporting can provide for those working to establish a credit score for the first time.
“Growing up, I never once thought about my credit score. There was no personal finance education available at my high school, and the one constant I always heard from my parents was stay away from debt!
As a result, the thought of getting a credit card never once entered my mind when I was in college. I didn’t have a car and had no major monthly expenses other than buying takeout, so there wasn’t a pressing need for me to worry about building credit. Certainly none of my friends were talking about it, and the debit card from my bank gave me the convenience I needed to make payments. Thus, finances and credit were really never on my mind. My earliest memories of credit scores were the Free Credit Report commercials with their cheesy jingles and costumed characters. Credit was unimportant; my only experience with credit was watching funny tv ads. I never gave a single thought to my credit score during my four years at college.
When we started Rental Kharma, I had a crash-course in all things credit, and I quickly realized how important credit scores were and how complicated everything surrounding them is.. Every aspect of the credit industry is byzantine and there are very few good resources on what to do to get started. It was in late 2012 that I first tried to check my credit. I remember going to CreditKarma.com and trying to sign up. The system asked for my name, address, and social, but at end of the registration, instead of seeing my credit score, I was presented with this message: “Due to insufficient credit history we were unable to generate a credit score for you.”
That was it. There were no resources or tips on how to build credit–just a single sentence that barred me from having access to all mainstream financial products. Over time, I thought about doing other things to build credit. I would occasionally, just for the heck of it, go online and apply for a credit card, and I would always get denied. I considered applying for a secured credit card, but the thought of putting a $500 deposit down for a crummy credit card with high interest just didn’t jive well with me. I truly felt for awhile like I was trapped. The only tool I saw to build credit was getting a secured card, but it was very easy to continue to put it off and never commit to putting down the deposit. As a result, I found myself in a position where I was the part-owner of a company devoted to helping people build credit… and I didn’t even have any credit myself.
In mid-2014, we finalized our reporting relationship with TransUnion, and a few months later I had my rent payments at my previous two leases added to my TransUnion credit report. Suddenly, I had two tradelines on my account. I remember going to Credit Karma and my score had gone from zero to 600+. It was a great feeling. Armed with a better credit score, I went out to find the credit card of my dreams.
My first job was to do a little bit of homework. Rental Kharma currently reports to TransUnion, and through a quick online search, I discovered that Barclay underwrites their credit cards on TransUnion reports. This meant that I would be a good applicant for a Barclay brand credit card. I applied for the Barclay travel card and was instantly approved, with a $5,000 limit. I was totally and completely blown away! I couldn’t stop talking about it in the office that morning–I had been approved for my very first credit card! I had made it to the mainstream financial world and it was all thanks to Rental Kharma.
Finally, the day came when my card arrived in the mail. I knew instantly that the fat envelope had to be my credit card. I took photos and carefully documented activating my card. After spending three years of my life building Rental Kharma, it was incredibly gratifying to see how it could change my life. And I know it can change yours too!
Armed with a better credit score and the information available on the internet, you truly are empowered to reach your financial goals! Best of luck and good kharma to you!”
As you can see from Bill’s experience, one of the challenges of credit invisibility is the difficulty in building credit when you don’t have it–Rental Kharma allowed Bill to establish some basic, positive credit, and from there he has been able to build up his score and diversify the tradelines on his credit report. We have compiled some resources for our customers who have established a TransUnion credit score for the first time by partnering with Rental Kharma. Read on to discover some great ways to build up your credit now that you have a foot in the door!
A number of credit card and loan providers will primarily or exclusively pull your TransUnion credit report when deciding whether or not to extend you a line of credit. These are great options for individuals who have built up their TransUnion score by reporting rent and now want to diversify their credit history!
Barclay Card is one of the largest credit card providers that primarily pulls TransUnion credit reports when determining whether or not to approve you for a card. As Bill mentioned in his story, he turned to Barclay for his first-ever credit card, and was finally approved.
Another great option if you are investigating your card choices as a rent reporter with a strong TransUnion score is to check out the credit pulls database available here. You can access all sorts of data regarding the credit applications of others, which banks pulled which credit reports, and whether or not individuals were approved. By entering your state, your credit score, and checking off “TransUnion”, you can pull up a list of credit providers that approved credit requests based solely off of the customer’s TransUnion credit report.
Based on our research here at Rental Kharma, the following companies are also known to frequently pull TransUnion reports:
Another option, as Bill mentioned above, is getting a secured credit card. A secured credit card requires a cash deposit at sign up, and that deposit then becomes the credit line for the account. By putting down a $500.00 deposit, you can then access $500.00 of credit and have your on-time payments reported to all three bureaus. While not an ideal long-term tool, a secured credit card is a great way to grow your credit history. NerdWallet has put together a list of some of the secured credit cards available today–check it out here.