Get answers to all your questions regarding no credit score-zero credit score and what it means if you want to make big purchases on credit.
When you need to borrow money, be it in a credit card or loan, your ability to repay the loan is gauged based on your credit score. To increase the chances of getting a credit card or a loan and ensure that the limit of the amount you borrow is higher, you should have a good credit score.
But what if you do not have a three-digit credit score? Does no credit score or zero credit score mean that you cannot borrow money? Do zero-balance credit cards affect score? We will be answering all these questions here to help you build such a credit score that you will never be denied a credit card or a loan.
What Does ‘No Credit Score’ Means? Is It Zero Credit Score?
If you have tried to calculate your credit score for the first time, you may have zero or no credit score. This is when you may have wondered if you have a zero credit score? Is zero credit score or no credit score bad for loans or credit cards?
The simple answer to all these questions is that no credit score or zero credit score does not mean you have bad credit. No credit score or zero credit score means that you have no record of borrowing money, which is why your credit score history is empty. So if you have a zero credit score, it does not, under any circumstances, mean that you have bad credit, and it simply implies that you do not have any credit history record, which is why you have a zero credit score.
Why Don’t You Have A Credit Score?
There can be many reasons why you do not have a credit score, and you have ended up with no credit score or zero credit score:
- One of the most obvious reasons is if you do not have a credit account. In that case, you will not have a credit history, so there will be nothing to score.
- If you have a credit account and still have zero credit score, this may be because your account has stayed dormant for a few months or years.
- Can you have a zero credit score even if you have an active credit account? The answer is yes. You may have no credit score if you have a freshly opened credit account because it has not been reported to credit bureaus.
You must have at least one active credit account reported to credit bureaus for at least six months to have a credit score.
How To Check If You Have A Credit Score History?
You can easily get your credit score for free on several websites by filling in some details. If you want an original credit score, you can request the credit bureaus to produce your credit score according to your credit history.
There may be slight differences in the various sources of credit score calculation because of the difference in the algorithm they use to calculate your credit score. Still, the credit card company or the lender gets an idea of your credit history with the credit score.
If there is no record of you borrowing money, you will not have relevant information to calculate the credit score. If you have a credit account that has been dormant for some time, you can request a credit score report from the credit card bureau or your credit card company.
Why Did My Credit Score Drop For No Reason?
If you keep a continuous track of your credit score, you may sometimes see a sudden drop in the score and feel that this happened without reason. Credit scores are calculated through an algorithm, so there is little chance of human error.
7 Reasons That Your Credit Score Drop For No Reason
If you see a drop in your credit score, the reason may be:
- You were late in your bill payment or missed a bill payment.
- Your credit utilization rate has suddenly changed. The higher your credit utilization rate, the lower will be your credit score for a given credit limit.
- Your credit limit is reduced.
- Closing a credit card also reduces your credit score.
- If you pay off a loan, that also reduces your credit score.
- Though rare, certain thefts or scams you fall victim to might also lower your credit score.
- If you have recently opened a new credit card or applied for more than one credit card, your credit score may drop for a short period.
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Things You Need For Your First Credit Card?
If you are applying for a credit card for the first time, there is a high chance that you will have no credit score or zero credit score.
In such a case, you will have to put in extra effort to acquire the credit card. You can either opt for a cosigner, a special student credit card, or any schemes that the credit card company may offer zero credit score holders.
Conversely, you can also build your credit score by opening a credit account through loans or other credits.
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5 Tips For Building Your Credit Score From Scratch in 2022
Building a credit score may seem like a task, but it is not too difficult. If you have zero credit score or no credit score, here is how you can build your credit score from scratch:
- Apply for secured credit cards. Secured credit cards are issued against a fixed deposited sum of money.
- Join in a family credit card. Attaching your name to a family credit card would start your credit account and build your score.
- Have a cosigner. A cosigner is a guarantor who signs your credit card with you.
- Get a credit builder loan. A credit builder loan is taken to get credit points.
- Make all payments in time to let your credit score soar.
How To Apply For Your First Credit Card With No Credit Score?
A credit score is a three-digit number ranging from 300 to 900, which describes the ability of a person borrowing money to return it. This course also depicts an individual’s repayment history, how credit utilization has taken place, and everything a lender would like to know before lending money to a person.
The lower the score is, the worse your credit, and the better your credit score, your chances of getting the loan are higher. Since the numbers are limited to a range between 300 and 900, no such thing as zero credit score even exists.
A zero credit score means you do not have any credit account history. If you want to apply for your first credit card in such a case, you can either work on building your credit score, opt for a credit card cosigner or go for those credit card options that you can choose even with no credit score or zero credit score.