Why You May Have No Credit Score or History

Learn About Credit HistoryWhen it comes to making large purchases - like a house, a car, or even a big screen TV - most people use financing. This process typically includes a credit check. But what does your credit score look like if you have no credit history?

Credit Score Breakdown

Most lenders use your FICO (Fair Isaac Corporation) score when determining whether they will extend an offer of credit to you. FICO scores (also referred to as credit scores) range from 350 to 850. As indicated by the list below, the higher your FCIO credit score, the better your credit rating:

  • Credit score between 750 and 850 is considered an excellent credit rating.
  • Credit score between 660 and 749 is considered a good credit rating.
  • Credit score between 620 and 659 is considered a fair credit rating.
  • Credit score between 350 and 619 is considered a poor credit rating.

However, it is possible that you can have a credit score of 0, which means that there is not enough information in your credit file to generate a credit score.

Your Credit History's Role

Some people wrongly assume that no credit history is a good thing because there can be no negative marks on your credit report. However, if you have little or no credit history, getting financing approval can be difficult.

Because your FICO credit score is based primarily on how you have used credit in the past, having no credit history leaves you with no credit score. Without a credit score, lenders do not have an easy formula to determine if you are a credit risk. Many lenders do not want to take a chance on an unproven applicant.

Other Possible Factors for a Credit Review

A lack of credit history and no credit score does not mean you will automatically be denied financing. In addition to the four main factors of a credit report - identification, account history, public records of bankruptcies, liens, etc., and inquiries from other lenders - many lenders will also look at your residency, employment, and banking history.

Residence History
Your residence history can play an important role in the lender decision-making process. Lenders may view not staying in one location for any extended period of time or breaking a lease at an apartment as negative factors. Conversely, a solid residence history may be seen as a positive element for a potential lender.

Employment History
Your employment history is another factor many lenders review, especially if you have little or no credit history. Stable and consistent employment may be seen by lenders as a good indicator of a candidate's level of responsibility.

Banking History
When you have no credit score, your banking history may come into play. Lenders tend to look more favorably on applicants who have checking and savings accounts.

Building Your Credit History Can Help

When you are approved for financing, you will begin to build your credit history, which will increase the chances that you will break free from the "no credit score" category.

However, as you begin to establish your credit, you will not immediately achieve a perfect score of 850. According to a Bankrate.com article, credit applicants are evaluated as compared to their peers. This means that if you have a shorter credit history, you will be compared to others in a related scoring model. It is important to note that not all scoring models allow for a perfect score. However, this does not mean you cannot achieve a score in the excellent category range.

Having No Credit Score Isn't a Hopeless Situation

Obtaining credit when you have no credit score can be frustrating since some lenders do not want to extend financing offers to applicants with no credit history. However, as noted above, some lenders will consider additional factors to applicants with limited credit histories. This means no credit score does not necessarily mean no credit offers.

For more information on credit scores and credit history, review additional resources in our credit library.


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