How to build credit when you don’t have it


Another strategy for those with a poor credit history is to apply for one of the newer credit cards that don’t require you to have a credit score, like Petal or TomoCredit.

But these card issuers require read-only access to your bank account to analyze your spending habits, bill payment, and income to determine if you’re eligible.

You’ll usually need at least six months of banking history, says Kristy Kim, co-founder and CEO of TomoCredit, which was launched in 2020. It also weighs your income, account balances and other factors.

Petal, which launched in 2018, mainly sticks to banking data, including regular income and bill payments, to create a cash score as a measure of overall financial responsibility,

Before applying, make sure you understand the terms of these cards, including fees (Petal and TomoCredit do not charge an annual fee), interest rates, and rewards.

Generally speaking, alternative data cards give you a low credit limit, from a few hundred dollars to $ 1,000 or more, although the limits are increased over time. TomoCredit requires new cardholders to make weekly auto-pay payments, so you can’t carry over a balance. After about three months, your payment period drops to once a month, and cardholders may eventually qualify for limits of $ 10,000.

These two card issuers report your payments to the three major credit bureaus, Experian, Equifax, and TransUnion.

While alternate data cards can be good starting options for someone with little or no credit history, be aware that you will be giving up your bank details, which could raise privacy concerns, says NCLC’s Wu. . (Petal and TomoCredit state that they do not share consumer data with third parties without their consent.)

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