Big Banks Could Approve You for Credit Without a Credit Score


A new federally backed program featuring some of the nation’s biggest banks aims to help you open a credit card even if you have no credit score.

Banks such as JPMorgan Chase, Wells Fargo and U.S. Bancorp could begin a pilot program this year that evaluates information from applicants’ checking and savings accounts to increase the chances of card approval, according to The Wall Street Journal. The goal is to help underserved but financially responsible Americans gain access to credit.

About 45 million Americans may be denied credit because they lack credit records and are “credit invisible,” according to the Consumer Financial Protection Bureau. Those without credit scores will typically pay with cash or debit cards.

Building a strong credit history is one of the first steps toward buying a home and achieving other major financial goals, says Jeff Arevalo, financial wellness expert at GreenPath Financial Wellness, a nonprofit credit counseling agency.

“If this initiative helps people get a head start on these financial goals, then it definitely can have a positive impact,” he says.

How Will the Program Work?

The banks in the program will share information from deposit accounts with the goal of enabling financially responsible customers without credit scores to build credit.

When evaluating credit applicants, banks will review account balances, payments and overdrafts. Avoiding overdrafts, for instance, could improve your odds of getting a new credit card.

This is a shift from the traditional model of approving credit card applications, which has relied heavily on the applicant’s credit score and credit report.

As Arevalo notes, those who do not have credit histories tend to be disproportionately Black or Hispanic. “This could be a help for many households,” he says. “Using credit cards wisely is part of financial wellness.”

What Are the Program’s Pitfalls?

The program has great potential but also potential danger for underserved borrowers who do not use new credit cards responsibly, Arevalo says.

“We don’t want this easier access to credit to lead to an increase in consumer debt,” he says.

When you are new to credit, Arevalo says, remember to:

  • Make payments on time to avoid late charges.
  • Pay off balances to avoid interest.
  • Keep total debt manageable.

“If people only make minimum payments and keep making purchases, their debt will quickly grow,” he says.

He adds that falling into bad habits can increase stress for consumers, possibly derailing their financial futures.

“If a person gets into the habit of making late payments or taking on more debt than they can handle, then the credit score will suffer,” Arevalo says. “They will have to take additional steps to repair the damage that has been done.”

What Are Options for No or Bad Credit?

Even if you have no credit or a thin credit file, you can build a great credit history on your own. Here are some of Arevalo’s tips for boosting your credit profile:

Become an authorized user on a creditworthy and trustworthy person’s account. Ask a family member or friend if you can be added to his or her credit card. “Just be aware that being added to another person’s account can impact you both positively and negatively, depending on how it is utilized,” Arevalo says.

Consider opening a secured credit card. This type of card doesn’t require a credit history, but you will need to make a security deposit to open the account. The size of your deposit is usually the same as your credit limit.

Apply for a store credit cardUse the card responsibly – pay in full and on time – and you can start building a strong credit history.

Stay current on other payments. On-time payments for utilities, car loans and student loans might help you establish a credit history. “Ask those companies to report payment activity to the credit bureaus,” Arevalo says.