What Does ‘No Credit Score’ Mean & How to Get a Credit Score
You probably feel good if you’ve avoided debt so far — no loans or credit card bills dragging you down each month. Good job!
But when you check your credit score … there’s nothing there.
Here’s why you don’t have a credit score — and steps you can take to build an impressive score from the ground up.
What Does ‘No Credit Score’ Mean?
Having no credit score usually means you’ve never opened a credit card, taken out a loan or borrowed money from financial institutions.
You don’t have any activity that the three credit bureaus — Equifax, Experian and TransUnion — can use to calculate a credit score.
No credit activity? No score.
Being “credit invisible” is a frustrating paradox: It’s hard to open an account without credit history, yet you can’t build credit history without opening an account.
Even when you apply for a new credit account, it may take months before you get a score. Your FICO score, for example, won’t appear until six months after you open a credit account.
- If you’re young, you might be caught in this situation.
- Recent immigrants also face this challenge, since foregin credit scores don’t transfer over to the U.S.
- You could also lack a credit score if you have credit but haven’t used it for more than 24 months.
This Doesn’t Mean You Have a Zero Credit Score
Just to clarify: No one has a zero credit score.
While FICO and VantageScore scoring models technically range from 300 to 850, only about 18% of consumers have a FICO score below 579, according to Experian.
Credit reporting bureaus don’t put a big zero on your credit score just because you haven’t opened any accounts. You’ll receive your score after opening your first credit account.
Your score won’t be great when you first start building credit — but you won’t start from zero either, or even 300.
You’ll likely be closer to a fair credit score (570-620) after you open your first credit account instead of a bad credit score (below 570).
The Difference Between No Credit vs. Bad Credit
Good news: No credit isn’t the same as bad credit.
It signals to credit bureaus that you’re neither a responsible nor irresponsible borrower. You’re a blank slate.
When you try to retrieve your credit score or report and have no credit, nothing will show up.
Bad credit shows up as a history of damaging activity, like several missing payments or bankruptcy.
A poor credit score is usually defined as below 570, though your credit options remain pretty limited until you reach at least 620.
How to Build Credit When You Have No Credit History
It takes time to build credit responsibly, but using the right strategy can get you there quicker.
Here are some tips from credit experts on how to build a good credit score from scratch.
- Become an authorized user
- Open a secured credit card or student credit card
- Take out a builder loan
- Open a store credit card
- Use a cosigner for a credit card or loan
- Have utility and rent payments recorded
- Pay attention to your student loans
1. Become an Authorized User
You don’t need a credit card to build a credit score, but it’s one of the surest ways to do it. You can ease into it by asking someone — your parents or other family members — to add you as an authorized user on their credit card account.
In most cases, activity on that credit card gets reported to both their credit history and yours, regardless of how much you actually swipe the card.
This lets you benefit from their responsible credit use. However, their irresponsible activity could also hurt your credit score, so choose wisely.
2. Open a Secured Credit Card or Student Credit Card
Secured and student credit cards both exist to help you build credit through careful credit card use.
Secured credit cards require a security deposit and usually start with limits as low as $200, usually the same amount as your deposit.
Student credit cards are usually unsecured with a low credit limit and may just require you to be a college student. They sometimes have tougher income and credit score requirements than secured cards.
3. Take Out a Credit Builder Loan
A credit builder loan exists solely to put you on the credit map. These financial products are typically offered by credit unions.
The name “loan” is a little misleading, though.
Instead of receiving a big payment from your lender, you make a cash deposit to them (up to an agreed upon amount).
“The lender sets aside your payments in your own personal escrow account, and at the end of the loan term, you get your money back — most of it anyway. They keep a small fee for their trouble,” says G. Brian Davis, founder of SparkRental.
The credit-building loan provider reports your monthly payments to the credit bureaus as an installment loan.
When the loan term expires, the financial institution reports the loan as “paid in full” — boosting your credit score in the process.
4. Open a Store Credit Card
Store cards tend to have looser requirements, so you have a better chance of being approved than with a traditional credit card.
They also tend to come with higher interest rates and fees, so only spend what you’re able to repay each month.
5. Use a Cosigner for a Credit Card or Loan
A cosigner with good credit could help you qualify for your first credit card or loan.
The debt and activity on the account affects the primary cardholder’s credit report the same way it affects yours, so keep up with payments for both parties’ sake.
6. Have Utility and Rent Payments Reported
Credit reporting agencies don’t automatically track utility and rent payments, which is a bummer, because these are often a great indicator of your financial responsibility at a young age.
Some clever companies have figured that out though, and they’ll pull info from your rental and utility accounts to report to the major credit bureaus.
Some rent reporting services include:
7. Pay Attention to Your Student Loans
Taking out student loans will earn you a credit history, too.
The major benefit to most federal loans is they don’t lend to you based on your credit score: Everyone gets the same interest rate, and loan amounts are based on need.
The drawback to getting a student loan, even a federal loan, is the heavy debt they usually carry. You’re better off avoiding them if you don’t need them and building credit history another way.
But if you use student loans to pay for school, managing the debt responsibly when payment comes due can boost your credit.
How to Continue Building Good Credit
Once you’ve obtained your first credit account, make on-time payments and don’t borrow too much.
It might sound basic, but it’s the best way to keep pumping up a healthy credit score.
Here are some things new borrowers often get wrong about credit:
- Don’t use all your available credit. Your credit utilization — the percentage of your credit limit you use — is a big part of your credit score. Keep it below 30% for the best results.
- Don’t apply for or open tons of credit accounts at once. Having a healthy credit mix can be good for your credit utilization, but opening multiple accounts in a short period raises a red flag on your credit report.
- Don’t carry a balance. Keeping a balance on your credit card from month to month does not help your score. It only increases your debt with interest.
Once you’ve established a credit history, you’ll start getting offers from credit card issuers and loan companies.
Compare offers, but be careful not to take on more credit cards than you can manage.
How to Check Your Credit Score
Checking your credit scores lets you see where you’re starting from.
So how can you check?
Many credit card companies provide it to their customers for free online. But that’s easier said than done if you don’t have a credit card yet.
You can get free credit scores from one of the sites below. You don’t need to be a cardholder to use them:
- FICO score check from Experian
- VantageScore check with Equifax
- CreditWise from Capital One: Free VantageScore from TransUnion
- Chase Credit Journey: Free VantageScore from TransUnion
- Discover Credit Scorecard: Free FICO Score from Experian
You can also try one of the dozen or so credit scoring apps on the market. Popular names include Credit Karma, Credit Sesame and myFICO.
Be aware that some companies only provide an “educational credit score,” which is basically a rough estimate of your actual credit scores, while others may charge a monthly subscription fee.
It’s also a smart idea to check your credit reports. You can view reports from the three main credit bureaus online at AnnualCreditReport.com.
Keep an eye on your credit reports as you build credit. Checking your credit report at least once a year helps you watch out for identity theft that could damage your credit history.
Can You Apply for New Credit With No Credit Score?
You can apply for credit cards, loans and financing with no credit profile, but your options for getting a good deal will be limited.
Your best bet is to start early with some of the credit-building steps above.
You can start with a secured card or become an authorized user, and your creditworthiness will likely get a quick boost.
Maintain a strong payment history, and within 12 months of responsible use with most secured cards, you’ll get a credit-limit boost.
Once you establish credit, keep up good habits and make timely payments. Your credit score will go up from there.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. Dana Miranda contributed.
