What Is a Credit Score?

A credit score is a three-digit number calculated using information from your credit reports from the national consumer credit bureaus: Experian, TransUnion, and Equifax. Your credit report includes credit accounts you’ve opened and your payment history on those accounts. Lenders use your credit score to decide whether to work with you and what interest rates and terms to offer. Without a credit score, you’ll likely have difficulty getting certain types of credit because lenders have no way to evaluate your creditworthiness.

Why Don’t I Have a Credit Score?

You may not have a credit score if you don’t have much activity with credit, either recently or at all. Here are the circumstances when you likely won’t have a credit score:

• Thin Credit File: If you have fewer than five credit accounts listed on your credit report, the credit bureaus may not be able to calculate a score because there’s not enough information available.
• Little Recent Activity: If you haven’t applied for new credit in a long time or haven’t used credit in more than six months, credit scoring models may not be able to calculate a score.

What Are My Credit Options With No Credit Score?

To get new credit, you’ll first need to establish credit. With no credit score, you can choose one of the following routes:

Secured Credit Card

Secured credit cards require you to provide a deposit as collateral for the card. That deposit usually serves as your credit limit. A secured credit card is a low-risk way to build your credit that can set you up to use a traditional card down the line.

Store Credit Card

Store cards are credit cards offered by a specific retailer. They typically come with a lower credit limit and a higher annual percentage rate (APR) than other credit cards, though they can be easier to qualify for with no or poor credit.

Getting a Loan Cosigner

If you’re applying for a private student loan or car loan, you can ask a loved one to cosign. The cosigner must have strong credit, which will likely make it possible for you to qualify for the loan at better interest rates and terms.

Becoming an Authorized User

As an authorized user on a relative’s or friend’s credit card account, you can use the credit card without taking responsibility for making payments on the account. The card’s account history and activity will be added to your credit file, which will help you get a credit score.

How to Build Credit for the First Time

Once you’ve decided on the path you’ll use to build credit, it’s important to follow certain best practices to strengthen your score as much as possible. Try these strategies for building credit with no credit history:

Consider a Credit-Builder Loan

Unlike a traditional loan you can use to make a purchase, a credit-builder loan is specifically for establishing credit. The lender will hold the total loan amount in a savings account while you make payments on it. Once you’ve paid off the credit-builder loan, you receive access to the funds.

Make All Payments on Time

Payment history is the most significant factor that goes into calculating your credit scores. Take all precautions to ensure you pay your bill on time each month.

Try Experian Go™

Experian Go creates an Experian credit report for you for free, even if you don’t have any credit accounts. You’ll also get suggestions on how to jump start your credit history and add more accounts to build your credit profile.

Add More Payment History to Your Credit Report

Some services allow additional payments not typically included in your credit report to contribute to your score. Experian Boost® can add eligible rent, utility, insurance, and other monthly payments to your Experian credit report for free, which could improve your FICO® Score.

Track Your Progress

Check your score and credit report regularly to make sure all information is accurate and you’re making the best use of any accounts or services you’re using to build credit. You can access your credit reports from each of the three credit bureaus for free through AnnualCreditReport.com.

Starting Your Credit Journey

With no credit score, you have a unique opportunity to start fresh with credit. By choosing the best credit-building products for your circumstances and managing them well, you’ll build a credit score that will reliably get you new credit when you need it. A good or excellent credit score will also allow you to take advantage of low rates and beneficial terms, saving you money in the long run.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate your credit journey and secure the best mortgage options available.