If You Have No Credit, What Is Your Score?
It’s not possible to have a zero credit score. Learn more about starting credit, especially if you don’t currently have any credit accounts.
Contributing Writer at Tally
February 15, 2022
If you’ve never opened a credit account and are interested in doing so, you may be curious as to whether it’s even possible with your current credit score.
You may be aware of the fact that lenders typically run hard inquiries on your credit report and take a look at your score to determine your creditworthiness. So, if you have no credit, what is your score?
The answer is a bit complicated. There is no such thing as a zero credit score. Your credit is established based on how you use your first credit account.
In this article, we’ll answer everything you need to know about starting credit scores. Specifically, we’ll cover what credit scores are and how they work. We’ll go over what you can expect your starting credit score to be and how you can figure out what it is currently.
This article should help you understand the principles behind starting credit and the things you need to do to build credit.
What are credit scores, and how do they work?
When you open a credit account, your lender will report information to the three major credit bureaus: Equifax, Experian and TransUnion. Credit accounts include things like:
Credit card accounts
Lines of credit
The info on your credit report is used to determine your credit score. There are two types of credit scores: FICO Scores and VantageScores.
FICO credit scores range between 300 and 850 and can be broken down as follows:
Exceptional = 800 to 850
Very good = 740 to 799
Good = 670 to 739
Fair = 580 to 669
Poor = 300 to 579
VantageScores have similar score ranges, broken down as follows:
Excellent = 781 to 850
Good = 661 to 780
Fair = 601 to 660
Poor = 500 to 600
Very Poor = 300 to 499
As you can see from above, even if you have bad credit, the lowest possible score you can have is 300. You cannot have a zero credit score.
If you have no credit, what is your score?
Now that we know you can’t have a zero credit score, let’s take a closer look at what your credit score is if you have no credit.
If you have never opened a credit account before, then your credit score will not be zero, but it won’t be 300 either. As FICO outlines, there are a few criteria that you need to meet in order to register a credit score:
At least one credit account open for a minimum of six months
At least one credit account that’s been reported to one of the credit bureaus in the last six months
No indication of a deceased individual on your credit report, which should not be a concern if you have never shared credit with anyone or opened a credit account before
Therefore, if you have no credit history, you will not have a credit score. Your first credit score will be established after you have six months of credit history and that information has been reported to the credit bureaus.
How you handle your credit accounts within the first six months of opening them will go a long way toward determining your first credit score.
What factors go into credit scoring models?
Your credit score is a three-digit representation of your creditworthiness. Essentially, it serves as a synopsis of the credit activity the bureaus have on file for you. As we highlighted above, the higher the score, the better your credit.
Many similar criteria go into FICO Scores and VantageScores. Your FICO credit score is calculated based on the following components:
Payment history: 35%
Amounts owed: 30%
Length of credit history: 15%
Credit mix: 10%
New credit: 10%
VantageScore doesn’t define the exact percentages they use to determine scores, but it does offer a breakdown of how it weighs different criteria:
Total credit usage, balance and available credit: Extremely influential
Credit mix and experience: Highly influential
Payment history: Moderately influential
Age of credit history: Less influential
New accounts: Less influential
Under both scoring models, making on-time payments in full is a key to building a good credit score.
Why are credit scores important?
When you, as a borrower, go to open a new credit account, your potential new lender will perform a hard inquiry on your credit file and check your credit score. Because your score is a measure of creditworthiness, your lender will use it to decide whether your application for a new credit account will be accepted.
Additionally, your credit score will likely determine the interest rates that you receive. A high interest rate could potentially cost you thousands of dollars over the years. Lenders and credit card issuers reserve the best rates for those with exceptional credit. A higher credit score increases the likelihood of a lower interest rate.
Lastly, a strong credit score will likely grant you access to the best credit cards, including those with cash back and travel rewards. Not only will you receive a great interest rate, but you’ll receive access to great perks that could make the card more worthwhile.
How can you view your credit score?
If you are looking for a free credit score, there are a few places where you may be able to see it. If you already have a credit account, your lender may provide you complimentary access to your score through its website or on your monthly statement. You can also utilize a credit monitoring site like Credit Karma to view your scores for free.
You can view more detailed information about your credit file by using AnnualCreditReport.com. Here, you can receive access to a free credit report. Your credit report can provide you with further insight into why your credit score is as high or as low as it is.
Checking your credit report can also help you monitor for identity theft. Even if you’ve never opened a credit account before, you still may want to take the time to check your report.
Identity theft can be a problem with personal credit files. If someone has opened a fraudulent account in your name, and it’s been open for at least six months, you’ll have a credit score. Odds are, it will be a poor credit score, as the identity thief was probably not making payments on your open accounts. You can potentially have high balances and late payments attached to your name.
What can you do if you can’t get a loan because you don’t have a credit score?
If you don’t have a credit score, you may struggle opening a new account. In these cases, there are some options available to help you build credit.
For example, you can try to open a secured credit card. The credit cards you are most familiar with are unsecured credit cards.
Secured cards are a financial product that are similar to unsecured cards, however, secured cards require you to put down a security deposit for your credit limit. For instance, if you want a $1,000 credit limit, you’ll need to put down $1,000 upfront. Then, you can use the card as you would a typical card.
You can also consider asking a family member to add you as an authorized user on one of their credit cards. Make sure it’s a family member who you can trust to make on-time payments, as both of your scores will be impacted based on how the family member handles their credit account.
Understanding how credit scores work can help when opening a card
If you have never opened a credit card, you may be wondering if you have the credit score needed to do so. If you have no credit, your score is not zero, nor is it the minimum score of 300. Your first credit score isn’t established until after six months of credit history.
This is assuming that you did not mistakenly open any accounts in the past that you may have forgotten about, or someone else did not already open a fraudulent credit account in your name.
Whether you’re interested in credit building or paying off credit card debt, it’s important to have the latest and greatest information at your fingertips. One way to do so is to sign up for the Tally newsletter. Tally delivers financial tips straight to your email each week, keeping you on track to financial freedom.