How do credit reference agencies create credit reports? And why do not you have a credit score? Being told that, you do not have a credit score or report can be frustrating. But do not concern it is the best opportunity to build the best credit report and score from scratch. Understanding the main reasons why you may not have a credit score will help you understand your financial circumstances well. Then you can begin taking steps to build up your score. Our credit consultants listed these reasons why you may not have a credit score and how to build your credit score.

If you do not have a credit score, it is down to one of these 2 reasons:

1. you do not have any credit history

2. your credit history is too old

 

You don’t have any credit history

It may sound clear, but to have a credit score you must have a credit report. And for a credit report, you should have a credit history. Your credit history begins when a credit provider reports info about you to one of the US’s 3 credit reference agencies – Experian, Equifax, and Call Credit. So, if you have never used credit in the United States, you will not have a history. And hence no credit score.

Your credit history is too old

The 2nd reason you may not have a credit score is necessarily the opposite of the first. You have had the United States credit accounts in the past. But a lot of time has passed since you opened it last time. When you close a credit account, it remains on your credit report for six years. However, after six years, it’ll no longer appear. So, if you close all your credit accounts and do not open any new ones, you might eventually not have a credit score anymore.

Usually, this occurs to people who leave the United States and settle down elsewhere. If this sounds like you, you can inspect whether there is still anything on your credit report using your last known United States address. Unfortunately, if nothing comes up, you will need to rebuild your credit history from scratch.

What is the meaning of having no credit score?

No credit score is different than bad credit. Bad credit is due to mishandling credit and earning negative marks on the credit reports. So, if you have missing payments, defaulting on loans, liens, or any other behaviors that lead to poor credit, your credit score will reflect it. No credit, on the other hand, means you have not had any recent credit activity that the credit bureaus can utilize to generate a credit score. No one has a credit score of zero, even if they have a troubled history with credit. The FICO scoring model, for example, ranges between 300 and 850.

It is rare for anybody to have a score below 470. As per Experian, 99 percent of customers have FICO scores higher than 470. But if you have no credit history, you do not have a score at all. There are some reasons why you may not have a score. You may be young and new to using credit, so you have not still had sufficient time to build up a credit score. You may have used credit in the past but have not recently, which means there is not sufficient recent info for a score to be generated. Even if you are using credit within the past few months, you can still finish without a score. That is because a few lenders can report your account activity to one of the credit bureaus or not report it at all. Actually, lenders are not needed to report to any of them, although most do.

What Should You Do if You Have No Credit?

If you do not have a credit score, do not worry: There are steps you can take to build one. Here are some of the great ways to establish a credit history and grow your score.

Make sure your activity is reported. Double-check that all your credit card issuers and lenders report to the 3 major credit bureaus TransUnion, Experian, Equifax to make sure your credit activity is counted.

Have someone add you as an authorized user. One of the quick ways to generate a credit score is to be added as an authorized user on the credit card of a family member or a friend that is open for more than 6 months. As an authorized user, that account will report to your credit file like it’s yours.

Open a secured card. If you are trying to establish credit, consider signing up for a secured credit card, which is designed for customers with poor or no credit. Secured cards need you to secure a line of credit up front with a small deposit.

Take out a credit-builder loan. Another option is to take a credit-builder loan. These loans, which are offered by credit unions but can be found at banks and online, need the borrower to supply a deposit that is held in an interest-bearing bank account.

Sign up to have rent payments reported. Another way to build a credit score without taking on debt is to have your every month’s rent payments reported to the credit bureaus. Typically, rent activity isn’t reported to the bureaus or involved in your credit score calculation, but there are services that’ll report rent payments on your behalf. Keep in mind that these services need a small fee, and your landlord may need to approve the transactions.