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If you’ve been reading about credit scores as of late, you’re likely starting to see just how important your credit score is. However, if you don’t have any credit at all, what is your credit score?
While a lot of people think that you don’t have a credit score if you don’t have credit, that’s actually not the case.
Now, nobody has a credit score of zero. That’s actually impossible.
With the 2 major credit scoring systems (FICO and VantageScore), credit scores range from a low end of 300 to a high end of 850. According to FICO, only 1 percent of consumers have a credit score below 470.
Related Reading: What Happens To Credit Score When You Cancel A Credit Card
While 300 is the lowest credit score you can obtain, if you don’t have credit, that doesn’t mean you’re going to have a 300 credit score to begin with. After all, if you’ve never had credit before, that means you haven’t done anything to hurt your credit scores.
In fact, most of you will find that your credit scores are far from that.
When you don’t have a credit history, the credit bureaus don’t know enough about you to estimate whether you’ll pay back borrowed money or not. More than not, that’s what a credit score is, it’s a number that shows whether you’re credit worthy or not.
Once you begin using credit, scores can be calculated.
How Can I Start My Credit?
There’s a few different ways you can begin to start building your credit scores.
Secured Credit Cards
With a secured credit card, you’ll have to deposit an amount of money. The creditor will request for your banking information and they will take out a deposit.
For example, if you have deposit $300, in return, they will give you a $300 credit card.
You do need to make sure the secured credit card reports to the major 3 credit card bureaus.
As long as you’re using the card correctly and making your payments on time, this should have a positive impact on your credit scores.
- Capital One
- Bank Of America
- Credit One
- Wells Fargo
Now, you can be an authorized user on anyone’s account, so as long as they give you permission to be just that.
It doesn’t matter, but they will have to give you permission to be an authorized user.
If you can get added as an authorized user, you’re going to piggyback off that person’s credit. If it’s one of your parents and they have 40 years of great credit, you can see your credit scores go up fast.
On the other hand, if they have bad credit, you may not want to get adding as it can hurt you.
For you to be added as an authorized user, someone has to trust you a lot. If you’re fortunate enough for someone to help you in this manner, be sure to use that card responsibly.
Credit Builder Loans - Another way to start your credit is with credit builder loans.
They can be a good way to build a payment history and to accumulate a small emergency fund at the end of a loan term.
I’ve Never Had Credit In My Life
If you’ve never had credit in your life, creditors can view that as a “red flag,” especially if you’re in your 30s, 40s or older. Before you begin applying for credit, take advantage of getting your free credit report.
If you don’t have credit but you have a file on your name, that would be a big warning sign to creditors.
Once you have been approved for your first lines of credit, there’s a few more tips we want to leave you with.
Limit Your Spending
If you can stay below at least 30 percent per credit card, your credit scores shouldn’t suffer much just in case you have to spend your credit.
Get Your Credit Scores
If you go to Credit Karma, you can sign up for a free account and you’ll get your credit scores from VantageScore.
- 300-629 - Bad Credit
- 630-689 - Fair Credit
- 690-719 - Good Credit
- 720+ - Excellent Credit