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Advice

'I didn't want to depend on him': What it's like to be credit invisible and how to change it

At age 28, Divya Sangam was credit invisible and dependent on her husband's credit score. Here's how she built excellent credit from scratch.

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Some 45 million Americans are credit invisible, according to the latest research from the Consumer Financial Protection Bureau (CFPB). While the thought of living a cash-only life might sound doable, the reality is harder than most realize.

It's an experience familiar to many young consumers, as well as anyone who's ever lived abroad or immigrated to the U.S. To establish credit, you typically must first open a checking and/or savings account, then take baby steps to start proving creditworthiness, either by becoming an authorized user on someone else's credit card, opening a secured card or getting a credit builder loan.

Public relations professional Divya Sangam, who built her credit from scratch after moving from Singapore to the U.S., knows first hand how hard it is to be credit invisible.

Sangam was 28 when she moved to the U.S. Her immigration status was linked to her husband's employer-sponsored visa, which means she was considered his legal dependent. She didn't have a social security number, and she couldn't open any kind of financial accounts in the U.S. 

Divya Sangam at home. Photo courtesy of Divya Sangam.

"I had to go back to zero," she tells CNBC Select. "I was very overwhelmed by the fact that the system was set up against you if you are dependent."

Sangam is lucky to have a supportive spouse who has a good credit score. She was able to rely on him for the couple's banking needs. But this isn't the reality for everyone who is credit invisible.

And it wasn't ideal for Sangam.

"I guess I'm stubborn and independent," says Sangam. "I didn't want to depend on [my partner]. I felt super beholden to him when I wasn't working."

After a few months, Sangam accepted a job working in PR and communications for Value Penguin. The job was a win-win: She received sponsorship for her own visa and also got the chance to learn the ins and outs of the U.S. financial system through her work.

"I am deeply thankful for the privilege I had of being with a personal finance company. I'm able to learn more about how to take better care of my credit, my finances, because I'm surrounded by so many experts," Sangam says.

Sangam soon opened her first U.S. bank account, but she didn't jump at the chance to get her first credit card.

"When you grow up in Singapore, you're actually actively discouraged from taking on debt," explains Sangam. Credit cards are considered luxury cards, and they aren't viewed as an essential financial product as they are in the U.S.

"I was still sort of in that mindset," she says, even after she learned that a credit score is important when applying for a new apartment or signing up for car insurance in the U.S.

The couple got along fine with only one credit score (her husband's) until they wanted to move into a bigger apartment. The apartment they had been living in accepted them based on Sangam's husband's financial background, but when they found a better place in a neighboring town, Sangam's credit invisibility became a sticking point.

"That's when we ran into trouble," Sangam recalls.

"My husband's report came out good, but for me, they didn't have any credit information. I had a Social Security number by that time, but since I didn't have a credit card, I was credit invisible."

The couple were eventually approved after sharing bank account statements and pay stubs to prove Sangam's income. But following that experience, Sangam was ready to build her own credit history.

Her first step: "I got a secured credit card," says Sangam.

She opted for a Bank of America card with an initial deposit and credit limit of $200. After a few months of on-time payments, Bank of America raised Sangam's limit to $500 without requiring an additional deposit. 

Within 30 days of having her card, Sangam remembers her score jumping from zero to 450. It has improved steadily since then, and two years later she has excellent credit.

Sangam could easily qualify for a new, improved rewards card today, but she still uses her secured card exclusively. She spends less than 20% of her total credit limit (which has increased since the initial boost to $500), and she pays off her balance in full every month.

"I just want to have a 100% repayment record," Sangam says.

If you're in a similar situation and need to build your credit from scratch, consider opening a credit builder card like Sangam did.

CNBC Select analyzed 27 credit cards that are marketed toward consumers with no or poor credit to determine the best cards for establishing and improving your credit score.

Here are CNBC Select's picks for the top credit cards for building or rebuilding your credit:

Secured cards are typically easier to qualify for, especially when you are just starting out, but you have to put down a deposit (which acts as your credit limit). With the Capital One® Secured Mastercard®, cardholders may get access to a higher credit limit after making five monthly payments on time. This is a great incentive to practice responsible card management, which will help you in the long run as you work to move from being credit invisible to have a good or excellent score.

Capital One® Secured Mastercard®

Capital One® Secured Mastercard®
Information about the Capital One® Secured Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.
  • Rewards

    This card doesn't offer cash back, points or miles

  • Welcome bonus

    No current offer

  • Annual fee

    $0

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    26.99% variable on purchases and balance transfers

  • Balance transfer fee

    None

  • Foreign transaction fee

    None

  • Credit needed

    No credit history

See our methodology, terms apply.

Pros

  • No annual fee
  • $49, $99 or $200 refundable deposit
  • Get access to a higher credit line after making your first five monthly payments on time
  • No fee charged on purchases made outside the U.S.
  • Flexibility to change your payment due date

Cons

  • High 26.99% variable APR
  • No rewards program
  • After you apply and submit your deposit, it takes 2-3 weeks to get your card
  • Capital One periodically reviews your account to see if you can be transitioned to an unsecured card, but unlike the Discover it® Secured Card there’s no clear timeline for when this will occur

Information about the Discover cards, Capital One® cards, and Deserve® Classic Mastercard has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.