Score Credit Card Loans From The Scoreless

Consumers without credit histories present credit unions with opportunities to lend credit cards and teach healthy plastic habits.


Credit cards frighten me. Why would I want to pay ridiculous interest rates to borrow money that I don’t have when I could just wait to get paid? Instead, I have a debit card and I use cash. I have automatic transfers if I overdraw my checking account. I pay my bills on time.

But the truth is I need a credit card. I need credit history. I need a credit score. And so do all credit unions young members just graduating high school or college and hoping to start their lives. And the longer these consumers have had a credit history, the better off they’ll be. The length of credit history accounts for 15% of an individual’s creditworthiness, according to

Who Are The “Unscoreables”? Hint: It’s Not Who You Think”, a recent article by Barrett Burns on the NAFCU Services Blog, addresses a segment of the population that is without a credit score, which makes it difficult for them to take out a loan. Not being able to take out a loan from a financial institution can be detrimental in a number of obvious ways. For one, a consumer is then unable to buy a car or a home or receive help during a serious life event.

Recent graduates without credit history are sometimes mislabeled as “high-risk.” But these individuals are great financial consumers who, if treated right, will become promoters of your financial institution and life-long members.

And credit unions should have no problem finding other details to base this group’s creditworthiness.

Credit union can look past a member’s lack of credit history and focus on factors like employment and rent payment history. Do these young adults pay their rent on time and in full? Do they have a steady source of income to pay bills with?

Not only can credit unions help young “unscoreables” by offering them loans not based on credit scores, but they can help a member with no score find a learning experience.

Teaching young adults how to use credit cards can give them the confidence they need to purchase and credit card. Because of your help figuring out the pros and cons and traps of credit cards, these consumers will most likely choose your institution for their financial services.

Here are several tips to share with young adults wanting to purchase a credit card:

  • A $20,000 credit card limit does not mean you can live like a rockstar, but it may make you feel like you can. Remedy poor will power with a low limit, such as $500 to $1,000. To get the most out of your credit score, use no more than 30% of your available credit. And pay off your debt every month.
  • Useless purchases won’t help you. If you’re trying to build credit, try having a trusted family member or friend put a big purchase on your card. Just make sure to get the cash up front.
  • Leave the credit card at home if you go to the mall or out for drinks. Take a reasonable amount of cash from your account for the event. It’s easy to swipe your card, but considerably harder to hand over a stack of cash.
  • Remember, negative credit history is like breaking a mirror. While the latter causes seven years of bad luck, the former haunts your credit report for the same amount of time.    

Sept. 19, 2012



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