How to increase your credit score online

Anyone who has ever applied for a credit card and been rejected knows that the main question that comes to mind is, “Why?” The usual answer is no credit score, although establishing one is difficult. To complicate matters, the financial system is a paradox: it focuses on your credit card or loan payments to create a score, but if you can’t get a card or a loan, you can’t establish a score. credit score.

The reason for this paradox is that traditional lenders tend to focus more on your income level or employment status than on paying your utility bills on time. This is how global credit risk models work, and it comes with drawbacks that affect rich and poor countries alike. In the United States, 63 million people – 1 in 5 Americans – are unbanked or underbanked, meaning they do not have a bank account or have limited access to financial services, according to the Federal Reserve.

This system disproportionately affects black and Latino households, as well as many immigrants who cannot transfer their credit score from their home country to a new one, leaving them at a greater disadvantage when it comes to funding big goals like education or the acquisition of a property.

Finding a solution to this problem has opened the door to alternative services that seek to bridge the gap between what banks think of your ability to repay them – known as your credit risk profile – and your actual ability to do so. do, which is generally underestimated. But it can be difficult to know which alternatives are legit and how they work. We’ve collected three in this guide that we hope will help you get the extra notch you need to be fully banked.

Increase credit

One way to establish or improve your credit score is to allow banks to consider different types of data about your financial behavior, such as utility and phone bill payments. This data is considered “alternative” financial data, and although the US Government Accountability Office reports that more lenders are using it to determine credit eligibility, there is no set protocol for how this type of data should weigh in their assessment.

Against this backdrop, Grow Credit was launched in 2019 to provide small, revolving lines of credit to cover common subscription bills such as Netflix, Amazon, Hulu, HBO Max and Spotify, to name a few. Grow Credit agrees. The company will give you a Mastercard credit card, without credit check, and you will need to link it to your bank account. You must use this card to pay for your subscriptions, and the balance on this card will be deducted from your bank account each month.

It works because credit reporting agencies like Equifax or Experian, which tell lenders about consumer credit scores, don’t factor utility bill payments into their scores like they do credit repayments. Because Grow Credit reports usage of its Mastercard as if it were a traditional credit card, it uses your bill payments to show banks what they want to see: your willingness to repay the debt.

Carillon

Older and more comprehensive than Grow Credit is Chime, a financial technology platform that has partnered with specific banks to provide banking services (checking accounts and savings accounts) and a Visa credit card that does not require no credit checks or charges maintenance fees.

The Chime credit card lets you cover all kinds of purchases, online and IRL, just like a regular card, but only up to the amount you deposit during your billing period. If you deposit $100, you can only spend up to that amount. If you deposit a little more, your line of credit increases, but you don’t spend your deposit yet. When it’s time to pay the credit bill, Chime will take the full refund of what you’ve deposited once a month and the rest will roll over to the next month.

Unlike many big banks that offer similar products, known as “secured” credit cards, you don’t need to make a $2,000 secure deposit to get a line of credit that never touches. This money. But Chime has requirements for issuing a credit card: you’ll need to open a Chime checking account and have deposits of at least $200 per month. The easiest way to fund this account is to make direct deposits with an employer, payroll provider, or “gig economy” company like Uber or Doordash, but Chime also accepts transfers from other banks, checks and cash transfers from authorized retailers.

Similar to Grow Credit, Chime will report your credit card usage to major credit reporting agencies as if you were using a regular revolving line of credit, adding points to your credit score over time. The website has a fairly slick web interface (similar in quality to the functionality of major banks’ credit and checking accounts), and Chime also offers companion apps for iOS and Android.

Reached

Upstart is a personal lender designed for people with low credit scores – around 300+ points – who reside in the United States and are employed full-time or about to start work. These minimum requirements can be especially helpful for newly arrived immigrants and for US citizens with damaged credit histories.

However, Upstart is not a bank. It is an artificial intelligence platform that partners with many small banks that will be able to generate loans while taking into account the non-financial data that Upstart includes in its credit score that will make you approve the ready. According to the Consumer Financial Protection Bureau, Upstart’s credit scoring model allows them to approve more applicants at lower rates than traditional banks.

Taking out personal loans can seem scary, especially when people with low or bad credit scores have had the experience of predatory lending with products like those peddled by “loan sharks.” To get started, it’s important to recognize your spending limits and make sure you can pay off debt within those limits. But Upstart has shown that its practices are unrelated to predatory lending. Regulators like the CFPB reviewed its credit risk model in 2019 and found that it adhered to fair lending practices and did not violate anti-discrimination laws. Moreover, it seems to be well regarded by financial publications like NerdWallet.

Through Upstart, you can apply for loans between $1,000 and $50,000, for debt consolidation or car refinancing. For this story, I took Upstart’s “check your rate” assessment, which asks about your income, employment status, education, and some expenses. You can complete the form fully online in about 10 minutes, but the response regarding your eligibility will come by mail. Unlike Grow Credit and Chime, Upstart doesn’t have a mobile app to track or make loan payments.

The interest rate varies from person to person, and just because you ask if you qualify for a loan doesn’t mean you have to accept what they offer. If you don’t, Upstart will follow up a maximum of twice and then leave you alone. When it’s time to pay off your loans, you can do so by check, over the phone, or make manual or automatic payments online.

None of these services have a record of investigations for consumer protection violations or fraud, which you can verify by searching the Federal Trade Commission’s online legal library. If you have used one of these services and believe you have been treated unfairly or wish to raise a complaint that the service itself does not handle, you can file a complaint with the CFPB.

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