Good Credit, Bad Credit or Just Limited Credit?

Customer checking credit scores using online app
While teaching a credit class recently at All Community Outreach, which provides free comprehensive human services in Allen, Texas, Daniel Cahill came away with the following insights from an engaged audience. 

Often there is focus on trying to “fix bad credit” and sometimes we fail to focus on stimulating a credit profile that is simply just limited. Many people have “limited” or “no credit” simply because they have not established active credit relationships for a variety of reasons. Always paying cash for things and staying off the credit bureau reporting platforms may not be the best practice when trying to build your credit history.

Here are my tips for bolstering a limited credit profile:

1) If you have financial discipline, don’t close old accounts just because you don’t use them. Instead, secure older credit cards away from easy temptation and simply use them a few times per year to keep the accounts active with the intension of paying off the balance rather quickly. Keeping them active helps your overall credit score in a positive way since credit bureaus study the length of a tradeline within your history. The longer the positive history the better!

2) If you carry a revolving balance, always try to pay more than just the very minimum amount due. Say for example, if a minimum payment due is $141.00 for a given cycle, try to pay $150.00 to ensure the payment activity is reflected as current and covering more than the minimum obligation. If you can afford it, always pay off the entire balance to avoid paying pesky interest whenever possible.

3) If you typically allow a spouse, family member or roommate to handle financial matters for you, consider the value of placing yourself as primary on an account to ensure your personal credit bureau is fed active trade information to keep your profile fresh. Don’t assume if you’re a joint account holder that your personal performance is reported as not all credit institutions report on authorized signers or joint owners.

4) Remember that debit cards issued from your financial institution are not true lines of credit. While they may display the Visa® or MasterCard® logo, no credit line is directly associated with your cash funds inside an account. In most cases, transaction history associated with your daily debit card activity is not reported to the credit bureaus. Reporting changes if your account is charged off at a loss to a creditor or there is an associated line of credit linked to your account.

5) Federal law allows each consumer to obtain a copy of their credit report at no charge, once a year. Other situations may grant this access as well. Request your copy here: Annual Credit – Home Page
For more information on All Community Outreach, please visit:

Headshot of NDBT Business Development officer Daniel Cahill
Daniel Cahill
SVP, Business Development Northeast Market
NDBT bankers teaching credit class
NDBT bankers teaching credit class at All Community Outreach in Allen, TX


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