I don’t have a credit score

No credit score? Here’s what you need to know

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You’ve just signed up for Credit Karma to get your free credit scores, but there’s one problem: You have no credit scores. What happened?

You might be young or new to the U.S., or maybe you don’t have recent credit activity. Because your scores are based on information in your credit reports, your reports might not contain enough credit history for the bureaus to score. And it’s more common than you might think: At least 45 million Americans don’t have credit scores.

If you don’t have scores, what does it mean for you? Here are five things you should know if you don’t have credit scores.

1. You may still have credit reports

Even if you don’t have scores yet, you might have information on your credit reports. The three major credit bureaus — Equifax, Experian and TransUnion — create your credit reports based on information from lenders and card issuers.

So if you’ve opened a credit account in the past, you probably already have a credit report. However, you’ll only see a score if your report shows recent activity — generally within the last 24 months.

If you have reports, be sure to check them on a regular basis even if you don’t have scores yet. Reviewing your reports consistently can help you develop a better understanding of your reports as your scores build, says Ken Chaplin, TransUnion senior vice president.

Regular reviews can also help you spot errors or signs of identity theft more quickly. For example, you may notice an account on your report that you didn’t open, or a credit inquiry that you didn’t authorize. If you think something is wrong, you can dispute the error.

2. You may have no credit scores even if you have open accounts

The number of active accounts on your report is a factor in calculating your scores. According to Chaplin, most scoring models look for activity within the last two years. If you’ve had credit in the past but no longer use credit cards, or you have closed accounts on your report, there won’t be recent activity to produce a score for you.

And even if you have recent credit activity, you still may not have scores if your lenders don’t report to the bureaus. Lenders might only report to one bureau, two bureaus or none at all, but they aren’t required to report to any of them. If you have an open account that isn’t reported to a particular bureau, you won’t see it on that bureau’s credit report.

If you want to build your credit, before you apply for any type of credit, be sure the card issuer or lender reports to all three major bureaus (Experian, Equifax and TransUnion). If your lenders don’t report your on-time payments to all three of these bureaus, potential lenders won’t see the healthy credit habits you’ve established.

3. You have fewer options for credit

Without a score, it’s more difficult — but not impossible — to get credit. Lenders like to see that you’ve borrowed money and paid it back on time in the past, which means you typically need credit to get credit.

If you don’t have a credit card, Chaplin says it’s important to use other forms of credit or loans to show your ability to make on-time payments and manage debt. If you take out a student loan and make regular, on-time payments, this can help build your score.

However, if you’re not getting approved for other forms of credit, a secured card may be an option. You put down a security deposit to open the account, and your credit limit is typically the amount of your deposit. With responsible credit use, you typically qualify to get your deposit back after a certain period of time.

You could also ask a parent or someone else you trust to add you as an authorized user on one of their credit cards. When you’re an authorized user, activity on that card typically appears on your report as if it’s your own card.

4. Having no credit score doesn’t mean you have bad credit

Not having a score may suggest you haven’t needed to use credit yet, which isn’t necessarily a bad thing. And it’s not an indicator that you have poor credit. In fact, once you get a score, it may be better than you think. A 2016 study of more than half a million Credit Karma members from 2008 to present shows that members who initially did not receive a TransUnion score later achieved an average first score of 639.

Once you have a score, your credit habits contribute to whether it increases or decreases over time, so it’s important to make all of your payments on time once you’re able to get your first credit card or loan.

5. It can take time to build a credit score

Chaplin says there’s no set amount of time it takes you to get a score. Many factors contribute to your score, including your payment history and how long you’ve had credit.

“Building credit means showing your ability to repay debts over a period of time,” Chaplin says. “Once you’ve established credit by getting a loan or opening a credit card account, you’ll begin building your credit history as you pay bills.”

Based on the study conducted in 2016, Credit Karma found that members who started with no score took an average of five months to receive a score.

If you’re new to credit, new to the U.S. or have few open credit accounts, you may not have a credit score. It can take a little while, but with consistent, responsible credit use, you’ll likely eventually see a score.

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I don’t have the best credit score but I. - Limited/Bad/Fair Credit Questions

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I don’t have the best credit score but I received a pre-approved PNC card. Where do I go to accept it?

When you receive a pre-approved offer in the mail, you should have all the instructions included with the offer. Please read carefully the package and follow the instructions. But before you accept the offer, you should know that pre-approved does not mean you will get the offer right away. The bank just pre-evaluated your eligibility for this card. You will still need to fill out a full application form and submit it to the bank. And if the bank decides you do not qualify for the offer, you will be turned down. Since your credit score is not good, we would not recommend you accept this offer as PNC credit cards are designed for people with established credit. Instead, we would recommend you look around for a more suitable credit card offer for you. There are a lot of credit cards for people with different credit scores, so you will definitely find an offer for you.

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No Credit Score Doesn’t Mean a Zero Credit Score

The most frustrating thing about credit might be the chicken-and-egg problem of establishing it: Nobody wants to give you credit when you don’t have a track record of using credit.

But if you’ve never had credit and don’t have a credit score, that doesn’t mean you have a zero credit score. You have the absence of a score: You’re “credit invisible.”

You have a different problem from someone who’s had credit and messed it up. That person has the harder task of restoring their credit.

You just need to get on lenders’ radar by building your credit in the first place. Then the data in your credit reports will earn you a credit score, and a good score will earn you better access to financial products.

What’s the starting point for your score?

The credit score scales used in most lending decisions, FICO and VantageScore 3.0, start at 300 and go up to 850. But just as being new to credit doesn’t mean you start at zero, it also doesn’t mean you begin in the basement at 300. After all, if you’ve never had credit, you’ve never made score-devastating mistakes.

Think of it like the first pop quiz of the school year. If you missed it because you were at the dentist, that’s different from being in class and answering every single question incorrectly. Eventually, your teacher will evaluate your performance, but not until there’s some data.

When you have no credit history, the credit bureaus don’t know enough about you to guess if you’ll pay back borrowed money.

When you have no credit history, the credit bureaus just don’t know enough about you to guess whether you’ll pay back borrowed money. And that’s all a credit score is: an estimate of the likelihood you’ll pay back the next credit you’re granted, based on the data in your credit reports.

Once you begin using credit and receive a score, it will depend on several things: how well you handle that credit, how long you’ve been using credit and the mix of credit types you’re using. Your score won’t start at the very top, but it won’t necessarily be as low as possible, either.

How to get credit in the first place

To introduce yourself to the credit bureaus and develop a credit history, you should apply for credit. You can start building credit with products that protect lenders from the risk you won’t repay, such as secured credit cards and credit-builder loans.

Before you apply, request a free credit report from each of the three credit reporting agencies. You’re entitled to one from each agency each year. If you’ve never had credit but do have a file, that’s a red flag: Maybe someone else’s information has been mixed up with yours or someone is using your identity to get credit. Dispute any errors to get them cleaned up.

Recipe for good credit: All bills paid on time, credit card balances low, and a mix of installment and revolving accounts.

Once you’re approved for your first lines of credit, follow these basic rules:

  • Pay bills on time, every time. Payment history influences your scores the most.
  • Use only a small portion of your credit limit. Keep your balances at less than 30% of your limit, and the lower the better.
  • Aim for a mix of account types — for example, installment loans with regular payments, such as an auto loan, and revolving debt, such as credit cards.

Follow these steps and you’ll fatten up your credit reports in short order. You’ll also have built a credit score that gets you lower interest rates and access to better credit products — an unsecured credit card or one that offers rewards, for instance.

Don’t get too hung up on numbers

There once was a possible credit score of zero — and it was the best on the scale. Experian Risk Analytics developed something called the National Risk Score, a number between zero and 1,300 designed to predict the risk that you’d eventually file for bankruptcy. The lower your number, the better. Under the main scoring models these days, the opposite is true.

But you know what credit experts say about credit scores? Don’t get too hung up on the numbers. Your credit score gets recalculated on demand, whether it’s requested 10 minutes or 10 months after the last time somebody asked, and it accounts for the most recent additions to your credit reports.

Rod Griffin, director of public education for Experian, says that you should focus instead on your “general risk” category. Each lender can set its own parameters, but generally the range for credit scores looks like this:

Paying every bill on time and keeping balances low will help you have good scores — no matter which scoring model a lender uses to get a snapshot of your credit habits or when that snapshot is taken.

This article updated Nov. 4, 2016.

I Have A Credit Score Of Zero, And It's Fantastic

Yes, you read that correctly. My credit score is equal to exactly nothing, and it’s one of the best things about my life! Now, obviously many people would think, “You have a credit score of zero? How is that a good thing?” Well, let me tell you.

Your credit score is not a good indicator of how good you are with money. Your credit score goes up whenever you pay your credit card bill and/or loan payments on time.

“But Stephen,” you say, “that does show how good I am with money!” Hold on, let me finish.

Your credit score goes up when you pay on time, and it goes down when you pay late, pay too little, or default on your loans.

However, your credit score will also never go up if you never take out a loan or use a credit card, which is why my credit score is at zero. I don’t have a credit card, and I’ve never taken out a loan. I do, however, have more money than the average college student. By comparison to most people in my situation, I probably have a lot more, but it’s not because I inherited much (maybe about $700-850), it’s because I’ve worked since my senior year of high school and haven’t spent it all on needless crap.

“Stephen,” you begin to say “are you suggesting that I squander away my money on frivolous pleasures?” No, no I’m not; that’s not what this article is about, remember. I’m going to explain why credit scores mean absolutely nothing when it comes to how good you are with money.

Now, the only way to get your credit score up is to take out a loan, or to buy things on credit. Effectively, what this means is that you have to end up paying more for items just to bump your credit score up. For example, if you want a couch that costs $600, you might buy it on your credit card that has a 15% interest rate. Once you’re done paying for it, it will have cost you at least $690 (excluding other fees), a whole $100 dollars more than if you had paid for it up front!

Or if you finish paying on a mortgage, your credit score will probably be very high. That is until you stop buying things on credit and taking out loans- that’s when your credit score takes a hit. So think about it like this: the bank/credit card company lends you money so that you can pay them back with interest in return for a good credit score. But, should you decide to stop living on credit and taking out loans, your credit score falls dramatically…why?

I’ll tell you why- it’s because your credit score is not a good indicator of how good/bad you are with money, it is an indicator of how often and how well you do business with the bank. Essentially, your credit score only indicates how safe of an investment you are. If you have a good credit score, you’re more likely to get a loan/credit card because you have proven yourself to be a safe investment for the banks; they will lend you money because they can count on making more money off of you.

I went to an apartment complex the other day to enquire about what they had to offer for myself and a friend of mine. The lady showed me diagrams of two bedroom apartments and went through the details of each. She also mentioned that the deposit would be around $30-40. Okay, that’s reasonable, until she said that they determine how much your deposit is will be based on your credit score.

Well, like I said before, my credit score rests squarely at zero, and it’s going to stay there for a while. The same is true with my friend- we both are able to pay for our college expenses out of pocket, so we have no need to take out student loans, nor do we have any need for credit cards. So I explained the situation to the lady, and I asked her what they would do in that case. She said they can work with our situation, but our deposit will be around $300-400.

So, would it be a good idea to open up a credit card account in order to raise my credit score and get a lower deposit requirement? Absolutely not!

When you stop and think about it, it would cost significantly more for me to open up a credit card account and pay on all of my bills with interest than if I just saved up for the higher deposit in the first place. And I’m not blaming the apartment provider for wanting to charge me more. After all, I have a score of zero, which either means that I never pay back on my loans, or I’ve never had any debt to pay off in the first place (mine is, of course, the latter). The point is that my credit score indicates that I’m a risky investment because I’ve never been invested in before, and I can’t blame them for wanting to get their money’s worth. After all, they are a business too.

But, my problem lies in the fact that many people bend over backwards trying to keep their credit score high. In the end, you’re only borrowing and paying back more money for a number that tells the banks that you’re a safe investment for them.

The important thing to remember is that the banks are not your friend. The bank tellers might be your friend, I have plenty of friends who work at banks. But, as an entity, the banks do not care about you as a person, they only care about if they can make money off of you.

With all of this said, there are two types of credit that I would advocate people use if necessary.

First, pay for anything you can afford up front so that you’re not always in debt to everyone. Once you have exhausted all other means of financial options, then you can take out student loans to pay for school, and/or a mortgage to pay off a house. The reason being is that the end result of both of these personal investments tends to make you more money in the long run. A college degree will get you a higher paying job, and a paid-off house is a wonderful asset to have!

A car is going to depreciate in value as you drive it, so car loans make you pay more for a car than what it’ll be worth once you’re done paying it off. Plus, a lot of times if you get in a wreck, you’re stuck paying on a car you don’t have anymore. Simplicity is bliss: pay for a car up front. If you can’t afford that brand new car you want, that’s okay; pay for a good used car until you save up enough money to buy a brand new car outright- because you’re getting screwed once you sign those lease papers.

So stop trying to break the bank paying the bank! You can live without constant debt, and honestly, you’ll breathe easier and it will be more affordable to do so.

Wisdom of the Week: It boils down to this- live on less than you make, build up your bank accounts, and never pay more for something you can get cheaper.

Why don't I have a credit score?

Not having a credit score usually means there is no credit history for the credit bureaus to assess. Having no credit score could be the result of taking out loans and paying them off as quickly as possible without taking on any further debt. It could be that your lenders only report to one credit bureau instead of all three, so your credit score would only be available from the credit bureau aware of your credit history. Rarely, it could also mean that you have been erroneously reported to the credit bureaus as deceased.

Having no credit score is only a problem if you do not need credit. However, a credit score can affect your ability to qualify for a mortgage or get one at a good interest rate, rent an apartment, get approved for credit cards or have low annual percentage rates for the ones you do get. It can also impact your ability to get a car loan and affect the amount you pay for insurance or your cable rates. A lack of a credit score can also prevent you from getting hired.

Having a credit score of some kind is usually essential. High credit scores are built up over time, as you build a history of making payments responsibly. Start by applying for a credit card through your bank, applying for a secured credit card, applying for a credit card from a store, taking out and repaying a student loan or a personal loan, and putting bills in your name and paying them on time.



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