Christian Widhalm, CEO of Bloom Credit, joins TheStreet to explain some of the mistake people make when trying to improve their credit scores.
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00:00What are some of the common mistakes people make in trying to repair their credit scores?
00:10I think one of the biggest is that they think it's going to happen overnight, right?
00:14And there's a big difference between, you know, repair and establish.
00:21So in the United States today, there's 100 million consumers, just about, I think 106,
00:27that do not have access to mainstream credit rates or products.
00:32Huge number. It's like 40% of the credit eligible population in the United States.
00:37About half of those have subprime credit, so they've done something to impair their credit,
00:41or their credit has been hurt.
00:44The other 50% are thin file or no file with the major credit bureaus, or unscorable.
00:50What that means is that there's limited history on them at the major credit bureaus,
00:54so that if a lender pulls information on them, they oftentimes can't extend their credit, right?
00:58Because there's not enough information for them to actually be able to make a credit decision.
01:05And we think that there's clear solutions that are in the market to be able to actually help fix that.
01:12For those that are thin file, no file, you could benefit from reporting 24 months of your checking account history
01:19almost overnight, because you can establish trade lines on past payments
01:24that ultimately can help impact your credit score much more quickly.
01:29On the credit repair side, for folks that have actually done something to impair,
01:35that's a little bit harder, right? That's a little bit more time.
01:38It's a little bit more going and actually establishing your repayment history.
01:42Because if you go back to what I mentioned earlier, one of the biggest things,
01:45actually I think the biggest thing in terms of the credit score is positive repayment history.
01:49So if you've done something to actually negate positive repayment history,
01:52you have to actually start demonstrating how you are becoming more positive in terms of your repayment history.
01:59And that can take a little bit more time.
02:01What are some of the most common credit card myths?
02:05Credit card myths, or do you think credit data myths?
02:08Credit data myths.
02:11So we kind of talked about it a second ago,
02:14there's this black box that kind of controls what the credit score is ultimately generated.
02:19It's very hard to determine exactly what's going to impact a consumer.
02:23I think there has been a surge in novel financial products, including credit builder products,
02:30that some of them are gimmicky.
02:32And I don't think that necessarily the major credit bureaus,
02:36even the lenders necessarily are enamored with them,
02:40because they're trying to gamify the system and figure out how to artificially inflate credit scores.
02:45That's not all of them.
02:46I'm just saying there's some that are out there that are gimmicky.
02:49The real thing is being able to go and demonstrate real credit worthiness.
02:53And again, alternative data coming from checking accounts,
02:56and then also real information coming from real card products, loan products,
03:01that you can ultimately open and establish history as a consumer.
03:06Microsoft
03:09www.microsoft.com
03:12www.microsoft.com