Building Credit Answers - Questions and Answers

Let’s face it, there are many things you should know about establishing credit from the ground up and after a damaged file. In this article, I will address the most common questions posed to me daily. 

Building Credit Question - What is PRBC and how do I use this company to establish credit?

PRBC is a non-traditional reporting agency. They track the way you pay your rent, utilities, cable and cell phone bills. From there, they compile a payment history report that can be used as supplemental information along side with your bureau report when lenders are trying to decide on whether to issue credit to you. FICO has partnered up with PRBC to provide Expansion scores based on your payment history with PRBC. These Expansion scores are only issued to the lenders upon request. In addition, all lenders do not use PRBC to consider your credit worthiness, so you must ask them to pull your PRBC report when applying for credit. In order to get started with PRBC, you can sign up with them and start reporting your good payment history from your rent, cable bills, utilities, and cell phone. PRBC will then charge you a small fee to verify your payment history and include it in your file. The good thing about PRBC is that your  report with them is free, and you can get a copy at anytime. This method is best if you don't have any payment history or a thin file. 

I just got rejected for retail store card, so what does a thin file mean?

It means that you do not have enough trade lines in your report to calculate a score or for a lender to evaluate your credit worthiness. People who are divorced, teenagers just turning 18, and immigrants all fall into the category of having thin files. FICO created a new way for consumer with a thin file to produce a score. It’s called Expansion score, and it uses information from nontraditional sources to calculate a score. The program use payday lenders, check monitoring companies, rent to own stores, utility information, and public records to help calculate a score. 

Building Credit Question - What do creditors like to see on my reports? 

Make sure your report has your present employer, previous employment, residence, and phone number, since creditors like to see this information when you are applying for a loan. They are checking for stability like how long you have been at your job and your home.

Building Credit Question - How long does it take to establish credit?

It can take from one to two years to establish good credit if you pay your bills on time. You need to display at least one year of on time payments before major bankcards like American Express and Visa take you seriously. 

Building Credit Question - How will paying with cash help me establish credit?

Start getting into the habit of paying cash or paying with your debit card. Paying with cash helps you manage your budget, and it restricts you to the amount of things you can buy. If you can't afford it, don't buy it. In the long run, this will help you with management skills when it comes to paying down on your bank cards and personal debt. Use your debit card on emergency bases only. Debit cards can cost you with over the limit fees and insufficient fund fees if you don't track your spending.

Concluding, review the article again and use whatever information you need for your own situation. Now that you are empowered with more information, go out there, and take action.