Dear Liz: Here’s a cautionary note you may want to share. I filed for bankruptcy almost three years ago. Many sites recommend taking a small personal loan or purchasing something small, like furniture, to pay for over time and improve your credit. So I bought a sofa from a local retailer with a no-interest loan deal. It is now almost completely paid off. When I checked my credit report recently, I noticed the installment loan wasn’t there. I called the retailer and found that they didn’t report to any credit bureaus. The lesson, of course, is to not presume that just because you can get a loan from somewhere, it will be reported on your score. I now have a sofa I didn’t really need and no benefit to my credit. And I feel stupid for not thinking to ask.
Answer: Plenty of lenders don’t report to credit bureaus. Even some credit unions, which are normally consumer-friendly, opt to report to only one credit bureau.
If you’re trying to rehabilitate battered credit scores, you want accounts to be reported to all three bureaus so that all three of your FICO credit scores (one from each bureau) can benefit. It doesn’t do your scores any good if a loan you’re paying on time isn’t reported to any bureau, and it does you only limited good if it’s reported to just one bureau because your other two scores won’t benefit.
You typically can find out simply by asking before you apply for a loan whether the creditor reports to all three bureaus.
The fastest way to improve your scores is to have both installment and revolving accounts. Revolving accounts include credit cards, but you don’t necessarily need to borrow money to improve your scores. Using a credit card and paying it in full each month also can help. If you don’t have a card, consider applying for a secured version, which gives you a credit limit equal to an amount you deposit with the issuing bank. But again, make sure the issuer reports the account to all three bureaus before you apply. You can find secured-card offers at LowCards.com, CardRatings.com, CreditCards.com and other sites.