Building Credit with No History? Find Out How Standby Cash® Could Affect Your Credit Score

Whether you’re looking to start building credit or improve your credit score, it can be challenging to know where to start. You may not qualify for an unsecured credit card, or perhaps you’re not comfortable with the interest rates on personal loans. For Huntington customers who meet eligibility requirements, Standby Cash can be used to help you access money quickly, based primarily on your banking history and not your credit score. But how does Standby Cash affect your credit and your credit score?

Why is Your Credit Score Important?

Your credit score plays an important role in your financial journey, and there are many benefits of establishing and building good credit. Your credit score affects your ability to qualify for a personal loan as well as the interest you may pay. Your credit may be a factor in major purchasing decisions such as buying or renting a home or purchasing a car. It can also help you to qualify for a cell phone account or TV and utility services.

Of course, your credit score isn’t the only factor that lenders and other companies will consider but creating a plan to build and improve your credit score can be beneficial in helping you achieve financial goals. For example, if your goal is to pay off debt, improving your credit score may help you reach that goal. If you take steps to help improve your credit score, you may qualify for a lower interest rate on your debt, which could allow you to pay it off faster or pay less interest. A higher credit score may also help you qualify for credit cards or personal loans with more favorable interest rates. Utility companies may waive certain fees for new customers who meet credit score thresholds.

Credit Score Range: The Basics

FICO^®credit scores most often range from 300 to 850. Your credit score is unique to your financial situation, and it can change over time. If you don’t have an established credit history or you’re working to improve your score after making a few mistakes, you may find your score on the lower end of the range. But what constitutes a “good” credit score? It’s important to understand that every lender or company that checks your credit score will determine how they’ll use your score. If your score is below 580, this is well below the average score of U.S. consumers and may signal to lenders that you present a higher credit risk. A score between 670-739 is often considered a good score, while a score from 740-799 may be considered very good. Scores above 800 are considered excellent.^ΩΩ

How Can You Build Your Credit?

If you don’t have established credit, it will take some time to build your score. The first step to building credit is to understand credit management and which factors contribute to your score. There are 5 key factors that help determine the widely used FICO score.

• Payment History: How you pay your bills—are they on time, late, or are they not paid at all?
• Total Outstanding Debt: How much debt you currently owe.
• Length of Credit History: How long you’ve had a credit account.
• New Credit Application History: How you have managed recent credit, including things like how many new accounts you have, how many recent inquiries you have and how long it's been since you opened a new account.
• Types of Credit: How you’ve used the credit available to you (for example: credit card, auto loan, or mortgage).
  
  For more information on how these factors affect your credit score, you can visit our Credit Education page.

When setting goals for establishing credit, it’s ideal to focus on the factors you can control and work on adopting habits that can help build a good credit history over time. For example, if you have a significant amount of debt, you can focus on making on-time payments and trying to avoid opening new lines of credit. This could help build a good payment history and reduce your debt over time, which could help improve your credit score.

How Long Does it Take to Build Credit?

Your FICO score provides a snapshot of your creditworthiness based on your history at a point in time. Because your FICO score will change as your financial situation changes, it’s calculated each time it’s requested.

It can take time to build credit from scratch, and the degree to which your score changes depends on your financial activity and your credit history. If you do not have any credit history, you’ll need at least one account that has been open for six months or longer and that has been reported to the credit bureau within the last six months in order to calculate your score.^‡

If you have an established credit history and have factors that have negatively impacted your score, such as missed payments, those actions will affect your score less as time passes. Your credit score isn’t permanent, so if you have a mishap, you can rebuild your credit over time.

What is Standby Cash?

Standby Cash is a line of credit that could be available to you right now. Log into your Huntington account online or in the mobile app to see if you qualify. You could access between $100 and $500 in just a few clicks. Just pay a 5% cash advance fee when you make a transfer. Pay it back over three months and there's no monthly interest charge when you set up automatic payments. Otherwise, a 1% monthly interest charge (12% APR) applies to the outstanding balances^†.

To qualify for Standby Cash, you need $1,000 or more in monthly deposits to a Huntington personal checking account for three consecutive months, and an average daily balance of $200 or more in your checking account. Other eligibility requirements apply, including your recent overdraft and/or return history^†. Qualifying for Standby Cash is based primarily on your checking and deposit history, rather than your credit score. Once you open Standby Cash, you can instantly transfer cash to your checking account. And you're eligible to make transfers as long as you continue to meet the requirements. The account and your activity are reported to credit reporting agencies, so your use could positively or negatively affect your credit score.

While Standby Cash is not overdraft protection, Huntington customers can leverage it to avoid an overdraft or return transaction^§. If you do not bring your account positive while 24-Hour Grace is in effect (before midnight central time the next business day), your Standby Cash line will be suspended from further use until your account is no longer negative^†. So, make sure to keep an eye on your finances and avoid overdraft and return transactions.

Can Standby Cash Help Me Build Credit?

We invented Standby Cash^† to help you access a little extra cash when you need it. Huntington customers can qualify for a $100 to $500 line of credit based primarily on their banking history^ΩΩ with us, not their credit score. Although your credit score won't be used to determine your eligibility, once you open your Standby Cash line of credit, we will begin to report the account and your activity to the credit bureaus just like with other lines of credit including auto loans, credit cards, or mortgages^# . When used responsibly, Standby Cash may help customers without credit history build credit.

While we cannot say whether your use of Standby Cash will positively or negatively affect your credit score, you should keep these tips in mind when accessing Standby Cash:

1. Make on-time payments. Huntington will report on-time (and missed) payments each billing cycle to the credit bureaus. Since on-time payments typically are a large contributing factor to your credit score, you should always make your payments on time.
2. Keep your account in good standing. If your account remains in good standing, your funds will remain on 'Standby' for you. Not only does this allow you to have access to cash when you need it – it also allows you to maintain the account over time. Since the age of your account may be an important factor in credit, you'll have the ability to maintain a credit account, even if you're not using it.
3. Keep your account balance low. We begin to report your Standby Cash to the credit bureaus within 1-2 weeks after you open the line of credit. The balance that you have utilized could affect your credit score. It's generally recommended that you keep your credit utilization below 30%. Lower utilization rates can help your credit score, while higher utilization rates can hurt your credit score.

Can Standby Cash Negatively Impact My Credit?

Standby Cash is a tool to help ease the stress of an unexpected expense and provide a little extra cash when you need it. Again, while it's difficult to determine whether your use of Standby Cash will positively or negatively affect your credit score, it's important to understand how the following scenarios may impact your credit:

1. Opening a new account: While we do not look at your credit score to determine your eligibility, a Standby Cash line of credit will report to your credit bureau as a new account. A new credit account can indicate increased risk and may cause your credit score to drop.
2. Payment History: Missed or late payments can have a negative impact on your credit score. Lenders want to be sure you can pay back debt on time when they are considering you for new credit. Late or missed Standby Cash payments will be reported to credit bureaus.
3. Charge-offs: If you fail to make payments on your account over time, your account may be permanently closed; this is referred to as a charge-off. Huntington reports this negative result to the credit bureaus, in addition to the delinquent payments that led to the charge-off. If your account is charged off, we will block future attempts to access Standby Cash.
4. Bankruptcy: If you file bankruptcy, we will also close your Standby Cash account, and this will be reported to the credit bureaus.
5. Utilization and Amount Owed: Two factors that may affect your score are credit utilization and the amounts you owe. The amount owed is the total amount of debt you carry that reports to credit bureaus; credit utilization is the percentage of lines of credit you have in use at any point in time. Higher utilization rates may hurt your credit score.
   
   For example, if Standby Cash is your only line of credit and you are using the full amount of $500, then you're using 100% of your total available credit. To decrease the potential for negative credit impacts, try to keep your credit utilization low. If you are using a high percentage of your credit, focus on making regular payments so you can decrease your utilization and the total amount owed over your three month repayment period.

Standby Cash accounts that are in their cool-off period or in any other non-delinquency related line freeze continue to be reported normally to the credit reporting agencies.