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Opt Out of Debt, Not Credit Reporting

Dear Experian,

I want to opt out of all credit reporting. Can I do it?

– CPR

Dear CPR,

Lenders and others with a permissible purpose have a legal right to check your credit references, which is accomplished by accessing your credit history. So if you have credit accounts, you can’t exactly opt out of having a credit report. But, you can remove yourself from the credit reporting system by not using credit. You might find it’s not as desirable as it seems, though.

The only way to have no credit report is to use absolutely no credit. Either never open an account or pay off your debts, close all of your accounts, and eventually the information will be deleted from your history, effectively opting you out of the credit reporting system.

You would have to live on a cash-only basis. While that sounds like a great idea, it does have some serious disadvantages. You may already own your home and can pay cash for your cars, but most people need loans for those major purchases. Having a credit card makes life so much more convenient for most of us, and you need a good credit history to be approved for a card and to get the best rates for other services.

For example, it is much easier to reserve a hotel or rental car with a credit card. Without a credit history, utility companies may require you to pay a higher security deposit. It may be more difficult to obtain cellular telephone service. Insurance companies utilize credit reports when establishing new policies or evaluating rate changes.

So, a credit history can be a powerful financial tool when used wisely.

It’s important to understand the difference between credit and debt. You can have one without the other. You need only a credit card or two to have a good credit history. Make an occasional, small charge and pay it in full each month to demonstrate you use the credit responsibly. You will have no debt, but will have the benefits of an established credit history.

Perhaps your objective should not be to opt out of credit reporting, but rather to opt out of debt.

Thanks for asking.
– The “Ask Experian” team

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