BY NATHAN SPIECKER for WEEKLY VOLCANO | 9/4/2026
When Maya applied for a car loan, she expected questions about her income and job. She had both. She had paid rent for years, kept up with her phone and utility bills, and generally avoided borrowing money she couldn’t afford to repay.
What she didn’t expect was to hear that the lender didn’t have much credit history to review. Maya wasn’t behind on her bills. She didn’t have a history of unpaid debt. But because she hadn’t used much traditional credit, there wasn’t enough information for the lender to get a clear picture of how she had handled borrowed money in the past.
That can create a frustrating problem. No credit isn’t the same thing as bad credit. But when there is little or no credit history to review, it can still limit our choices. A person with little credit history may have trouble qualifying for a loan or credit card. They may have fewer options or need a larger security deposit or a co-signer in some situations. When they do qualify, the choices available may cost more. And to make matters worse, often the problem can show up at exactly the wrong time: when someone needs a reliable car, wants to rent a home, or is trying to prepare for a major purchase.
This situation is sometimes called credit invisibility. Someone who is credit invisible has little or no credit history in the traditional credit reporting system. A person with a thin credit file has some history, but not much.
There are many reasons why this happens. Young adults may simply be starting out. Some people have always used cash or debit cards and avoided borrowing. Someone who recently moved to the United States may have established a financial history somewhere else, but that history may not follow them here. Others have had limited access to mainstream credit because of barriers that affected their communities long before they personally applied for a loan.
A person can handle money responsibly for years and still have little information that a lender can see. The financial system records some kinds of behavior more readily than others. That is why Maya’s situation can be so frustrating. Paying rent and utilities on time is responsible financial behavior. So is paying a phone bill when it is due. But many of those payments don’t automatically become part of a traditional credit history.
Some services allow consumers to have rent and other payments reported. There are also lenders and scoring systems that may consider alternative information. But the details vary. A utility payment that helps in one system may not appear on a traditional credit report. A rent-reporting service may charge a monthly fee or report information to only some credit reporting companies. This is where we need to be careful.
“Build credit” sounds simple, but it has also become a marketing promise. Before paying for a service, ask what information will be reported, who will receive it, and what the service will cost over a year. Don’t assume that a payment made every month automatically helps establish the kind of credit history you need.
It also helps to start with a different question: Why do I want to build credit right now? Do you need a certain credit score to rent an apartment? Are you preparing to apply for a car loan? Do you expect to need a credit card? Are you planning for a future home purchase? Or do you simply want to establish a credit history before you need it? Once we know the goal, we can look at what we’re being asked to put at risk.
A secured credit card is one of the more established ways to begin building a traditional credit history. We provide a security deposit, which often becomes the card’s credit limit. That reduces the risk to the card issuer and can make a secured card a relatively low-risk way for a consumer to get started. But it’s important to check the details. Does the card report account and payment information to the major credit reporting companies? What fees does it charge? Is the deposit refundable according to the terms of the account? In any case, some of the advantages are that a secured card doesn’t require us to carry a balance or pay interest to build credit. We can use it for a small purchase already in the budget and pay the bill as agreed.
An authorized-user arrangement can be another option, but it requires more trust. An authorized user may benefit from the history of someone else’s credit card account if the card issuer reports authorized-user information. Before agreeing, find out whether the issuer does report it. Look at how the account has been managed. Has the primary account holder made payments on time? Is the account carrying a large balance?
This isn’t simply a matter of borrowing someone else’s good credit. The account’s history can affect what appears in the authorized user’s credit file, and the primary account holder is generally responsible for the debt. Both people should understand whether the authorized user will actually use the card and who is responsible for any spending.
A credit-builder loan takes a different approach. These loans are designed to create a record of regular payments. The details vary, but the consumer generally makes payments over time, with the funds becoming available after the terms of the loan are completed. That can be useful, but it comes at a cost. Interest and fees may apply. Before signing up, find out exactly how much the loan will cost from beginning to end. If the goal is simply to establish credit, a less expensive option may be available.
Rent reporting may appeal to renters because it can use a payment they are already making. But here again, ask where the information will go and what the service will cost. Paying a monthly fee to report rent may make sense for some people and not for others.
At the end of the day, the point isn’t to sign up for every product with the words “credit building” attached to it. Opening several new accounts, taking out a loan we don’t need, or paying multiple fees can create new expenses without giving us much in return. In Maya’s case, she didn’t need to open a credit card, take out a loan, and sign up for a reporting service all at once. She needed to think about what she was preparing for and choose one affordable way to begin building a deeper credit history.
This week’s action: Think about why you want to build credit. Then compare one or two options based on three questions: What will it cost? What could go wrong if I miss a payment? And where will my information actually be reported?
No credit isn’t bad credit. But it can still have consequences when lenders have little information to work with. Building a credit history can help expand our options, but it works best when we understand what we’re paying for and why. And once that history begins to appear, another question follows: What happens to all of that information? Next, we’ll look at how our credit history becomes a credit score.
Attribution: This column is produced by the Washington State Department of Financial Institutions, Washington’s financial services regulator, to provide consumer education and protection. Learn more or file a complaint at www.dfi. wa.gov.
