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No Credit Score? Now What?


on 8/15/2018

Group of friends on couch, looking confused

 

 

So, you don’t have a credit score.  Is that an issue? Have you done something wrong? What is the purpose of a credit score?

Why would I not have a credit score?

 


You may not have a credit score if:

  • If you have never borrowed money from a lender, then you would not have a credit score.
  • If it has been more than seven years since you borrowed any money.In this instance, you probably don’t have a credit score anymore because your credit report is considered dormant and it’s basically collecting dust.

Should you be worried if you’re scoreless?

A credit score is used to determine your reliability to repay the money you have borrowed and it can also be used to determine your interest rate on a loan.  Your credit score is also used by insurance companies to determine your insurance premiums.

Credit scores are helpful to mortgage companies, utility vendors, landlords, and financial institutions because they help them determine if you have a good track record of repaying what you have borrowed. If you don’t have a credit score, it just means companies don’t have any information to go on when trying to determine if you will pay them back or not.

Some employers will also check your credit report and score before considering you for employment. They are looking for someone who is responsible and a credit report is often another tool they can use for some insight.


Having no credit score is not necessarily a bad thing, but having a good score matters.

Not having a score is way better than having a bad track record of late payments, collections, or defaults on past loans.

However, you may want to consider starting to build your credit if you ever plan on borrowing money. If you cannot pay cash for everything, like your car and your home, then a credit score will help you get a loan and pay the least amount of interest possible in many cases.


So does this mean that you should go out and start applying for a bunch of credit cards now?   

Definitely not! It will not do you any good to start randomly opening cards everywhere.

Start small with a small low limit credit starter loan that you can easily manage. Be sure to pay your bill on time so you can establish a good reputation for repayment.  Get a credit card with a limit that you know you can manage, and make your payments on time.


Don’t get in over your head. 
Important things to know when considering a loan:

  • Know your budget and what amount of monthly payment you can afford.
  • Understand the interest rate you will be charged and how much that could cost you over the life of the loan.

Start building a history of responsible credit and you will build a good credit score.

Your good credit score will then help you get the lowest rates on future mortgages, auto loans, credit cards, and even insurance.  That’s the benefit of being financially responsible. 

Genisys Credit Union’s credit starter loan will put you on the right path to building your credit score. Don’t have a credit card? Genisys has a variety of credit cards to help you start building responsible credit usage. 

Contact us for or stop by a local branch for more information!

© Genisys Credit Union and www.genisyscu.org, 2018.  Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content

 

Resources:
http://www.transunion.com/credit-report
https://www.nerdwallet.com/blog/credit-score/zero-fico-score/

 

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