What Is a Credit Ghost?

People who don't have enough account activity are invisible to the credit scoring system.
Bev O'Shea
By Bev O'Shea 
Edited by Kathy Hinson

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Credit holds the key to much of modern life. Even if you prefer using cash, having a good credit score can save you money on insurance or loans and give you more choices when shopping for apartments or cell phone plans.

Credit cards can help you cover emergencies and are all but essential for making travel reservations.

And when your name is on a credit account, credit bureaus receive reports about your account activity. The bureaus build your credit reports, and when enough data accumulates, you’ll have a credit score.

But millions of U.S. adults don’t have enough activity to produce credit reports or scores. When it comes to the credit industry, they might as well be ghosts.

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Who is a credit ghost and who is ‘unscored’?

Someone who lacks a credit history with one of the nationwide credit reporting companies is considered "credit invisible" or a credit ghost. "Unscored" consumers have a credit file, but the data is too sparse or too old to produce a credit score.

A 2021 analysis by scoring company FICO found 25.3 million U.S. consumers have insufficient credit history to generate a traditional credit score. And 27.5 million have sparse or inactive credit files. That can include:

  • Young people who are just starting out.

  • Those who stopped using credit — for instance, older people who’ve paid off their home and car or people who prefer using cash.

  • Americans living abroad who did not keep their U.S.-based credit accounts active.

Just starting out? Get on the credit radar

Credit newbies will find it’s hard to qualify for credit without a history of using it.

There are ways to start building credit, though:

Authorized user status: Ask a family member or friend who has a good payment history to add you to his or her credit card account. Make sure the issuer reports authorized users’ activity to at least one credit bureau. That might be enough to get your credit file started.

Secured credit card: You must pay a deposit, and often an annual fee, but these cards are easier to get because your deposit reduces the lender’s risk. Use one as a steppingstone to a standard card.

Credit-builder loan: You take out a loan, but you don't receive the money until you've completed the payments. If you pay on time and in full, you build a positive credit history.

In addition to the above, there are newer options to build credit, such as having your rent payments reported or using tools like Experian Boost and UltraFICO that factor good financial habits into your credit profile.

Combine methods for best results; using a secured card and a credit-builder loan together is particularly effective, for example.

Tip: Be sure to pay bills on time. That’s the top factor in your credit scores.

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Have a thin credit file? Become scorable

To have a FICO score, you must have a credit account that was active within the past 6 months. Its competitor, VantageScore, looks back 24 months for activity.

If you have a credit card but not much payment history, build your file by using the card lightly and paying on time. You don’t have to carry a balance to generate a credit score. Pay in full each month to avoid interest.

If you don’t have a card, try the credit-building methods outlined above.

Tip: Use just a small portion of your credit limit — no more than 30% and preferably less. The second biggest influence on scores is credit utilization, or how much of your limits you're using.

Have a stale file? Freshen it up

To ensure you have continued access to credit, keep using your credit cards lightly. Consider sending a small, recurring charge to each card, such as your cell phone bill or Netflix subscription, and set up autopay so you never pay late.

Tip: Keep your oldest cards open unless there’s a compelling reason to close them, such as high fees. The length of your credit history also influences your scores.

No longer a credit ghost? Now protect your score

Review your statements carefully for suspicious activity. Even better, set up account alerts or regularly check accounts online to catch problems early.

You’re entitled to a free reports from all three major credit reporting bureaus by using AnnualCreditReport.com. Check all three and dispute any errors you find.

Then sign up for a free credit score and report from NerdWallet so you can track your credit. Any unexplained change could signal an error or identity theft. The sooner you address those, the better.