So, having no credit history doesn't mean you have never paid any bills. It just means that none of your bills or expenses have been reported to the credit bureaus. You might have no credit history if you have never had a credit card or if you're someone who prefers to pay for everything from homes to cars with cash.
People who have no credit history are known as credit invisible. Credit invisibility is typically due to the lack of credit accounts or the result of not using credit for a long period of time, resulting in information being removed from your credit history.
To build your credit history, consider applying for a secured credit card, which requires a deposit. You can also become an authorized user on another person's credit card to help you establish credit history. Once you've started to establish a credit history, keep it in good shape by paying bills on time.
Whether you're young, new to the U.S., don't have recent credit activity, or have have what's known as a “thin” credit file, the major credit bureaus may simply not have enough information to compile your credit scores.
You can still get approved for a credit card without a credit history. In fact, there are credit cards designed for people with no credit, such as secured cards and student cards. You'll want to pay attention to features like fees and interest rates when shopping for your first credit card.
Even if you have a reliable income but you have no credit history, you will be seen as a something of a risk because you don't yet have a track record. And a lack of credit can result in: Trouble finding a place to live. Having to pay higher utility deposits.
Here's an explanation for how we make money . According to data from the Consumer Financial Protection Bureau (CFPB), as many as 26 million Americans are “credit invisible,” meaning they have no credit history.
It may be possible to live without credit if you aren't already borrowing through student loans, a mortgage or other debt. Even so, living credit-free can be very difficult. Tasks such as finding an apartment or financing a car can become challenging obstacles without credit.
Every person's credit journey is unique so there's no hard-and-fast rule about how long it will take to build credit. The major credit scoring models generally require two to six months of credit activity to generate a credit score.
While it can vary based on your starting point, it generally takes three to six months to establish a credit history.
That might leave you wondering, how long does it take to build a credit score? At the very least, it will take six months to establish a credit score from nothing.
Most people won't have credit reports or scores before turning 18. You typically have to be at least that age to open a credit card in your own name. If you've never used any form of credit before, there's no way to track your credit usage. And in many cases, that means credit reports and scores may not exist.
What is the lowest credit score possible? Most of the credit scores that lenders use in the United States, including most versions of the FICO Score, range from 300 to 850. Therefore, most financial professionals generally accept that 300 is the lowest credit score a consumer can have.
Between mortgage loans, credit cards, student loans, and car loans, it's not uncommon for the typical American to have one or more types of debt. The ones who are living debt-free may seem like a rarity, but they aren't special or superhuman, nor are they necessarily wealthy.
So which scenario is worse — not having any credit or having bad credit? “Neither is good,” says Greg Reeder, CFP, a financial advisor with McClarren Financial Advisors in State College, Pennsylvania. However, “A poor credit score is worse,” he says. “If you have no credit, you can start from the ground up.
Yes, no credit does mean no credit score. That means you have no credit report, which in turn means that you have no recent experience with loans or lines of credit. You may never have borrowed money from a lender that reports to the credit bureaus, which store information about your credit history.
The Bottom Line. Both lack of credit and poor credit can make it difficult to use credit to finance a home, vehicle or other items you need. While neither situation is ideal, lack of credit is easier to address. Poor credit can take years to rebuild, and is a situation you should do your best to avoid.
In your 20s and 30s, a good credit score is between 663 and 671, while in your 40s and 50s, a good score is around 682. To get the best interest rates, terms and offers, aim for a credit score in the 700s.
If you're just starting out, you'll need at least one credit account open and reporting to at least one of the major credit bureaus (Experian, TransUnion and Equifax) for at least six months to generate a FICO credit score. FICO® Scores☉ are used by 90% of top lenders.
On-time payments
The best way to get your credit score over 800 comes down to paying your bills on time every month, even if it is making the minimum payment due. According to LendingTree's analysis of 100,000 credit reports, 100% of borrowers with a credit score of 800 or higher paid their bills on time, every time.
Building Credit Takes Time
Building credit from scratch usually doesn't happen overnight. After opening your first credit account, it could take several months before enough payment history is reported to generate a credit score. That's why it's a good idea to start working on your credit before you actually need it.