Is it even possible not to have a credit score history? Well, yes! You may not know that you don’t have a credit score until you apply for a line of credit like a loan, credit card, etc. Credit Score is a brief of your credit health in a numeric form. Using this three-digit number, the credit providers or lenders asses the repaying capacity of the borrowers and determine their creditworthiness. The higher your credit score, the easier it is for you to get the loan, and your interest rate will be lower.
So, if you are wondering why you might not have a credit score and its meaning, here we explain everything!
No Credit Score: What Does it Mean?
Your credit score is calculated based on your past credit transactions. The same is recorded in the credit report. So, a credit report contains the record of your credit history. It includes past payments, missed or late payments, credit utilization ratio, etc. There are three major credit bureaus – Experian, Equifax, and TransUnion (CIBIL). These organizations generate credit reports by collecting the borrower’s credit data and monitoring their credit activity. The lenders like banks, etc., credit card companies, and other financial institutions provide credit history to these credit bureaus.
Since credit score depends on credit activity, you will have no credit score history if you do not have any credit activity. And not having a credit account will mean not having a credit report. This makes you unscored! If you still want to check your credit report, connect with Due Factory for a free credit report.
No Credit Score: Other Reasons
Other than having no credit activity, there might be some other reasons too for not having a credit bureau score:
1. No recent activity
While calculating your credit score, the credit bureaus review your active accounts. Most scoring models generate the score based on the past two years’ credit activity. If you have had credit in the past but don’t use the credit cards now, or you have closed accounts, you might not have a score due to the absence of recent credit activity.
2. Lenders did not report to the Credit Bureau.
When you have a recent credit activity, and your lenders fail to report the same to the bureaus, you will not have a CIBIL score. Sometimes, lenders report your credit history only to one bureau or two. You will see no credit score on that bureau’s credit report, which isn’t reported. We suggest that when you start applying for any credit, ensure the lender reports your credit activity to the major bureaus. It is vital because your potential lenders will not see your healthy credit habits if your lenders do not report your timely payments.
3. Recent immigrant
If you are a recent immigrant, you will not have no credit score history. Even if you have a credit score from another country, it might not be useful in India. So, all the immigrants need to open a line of credit in the new country to establish their credit history and begin credit building. Due Factory can help you with credit improvement, support your credit repair journey, and provide the best recommendations to maintain your credit health.
Does No Credit Score Mean Having a Zero Credit Score?
Having no credit score does not make it a zero credit score. Also, it is important to know that no one can have a credit score equal to zero. The credit score ranges from 300-900, depending on the type of credit bureau. Even people with poor or bad credit have a minimum credit score of around 300. So, be informed that “no credit score” does not mean “zero credit score”.
Can I Get Credit with No Credit Score?
Now, another question that might pop up in your mind is whether you will get a line of credit without a credit history. Getting credit cards or loans may be difficult if you don’t have a credit history, but it is not impossible. Since lenders use your credit report to find your ability to pay the debts on time, without any loan repayment history, they cannot assess your creditworthiness. Depending on the lender’s policies and processes, some lenders deny applications without a credit report, some offer high-interest rates, and some provide loans to new credit borrowers at favorable terms. You need to check with your lender about the credit process in case of ‘new credit seekers’. In case you are denied credit without a credit score, you still have the option of applying for a secured card against a Fixed deposit through www.duefactory.com, thereby gradually creating a credit history. This way, you will be eligible for credit based on your credit score!
Why Having a Credit Score is Important?
Credit scores are an important determinant of your financial health. Having a good credit score helps you get loans. The lender evaluates your credit insights and decides your borrowing terms. Having a good credit score helps you get faster and easier loan approval and also helps you get better interest rates that allow you to save money considerably. People with higher credit scores can access multiple lenders and get the best loan deals.
Wrapping up
Since credit scores are based on your past credit activities, those without experience managing credit will not have a credit score. If you have been applying for credit for the first time, it may take some time to see a credit score. You must make several payments and maintain your credit account for a certain period to establish your credit score.
Wondering why you might not have a credit score or are you new to credit? Take assistance from www.duefactory.com for credit monitoring and credit support.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
FAQs
1. What are the main reasons for not having a credit score?
Ans. The main reason for not having a credit score is that you don’t have a credit activity. There is no credit report without credit activity, and you don’t have a credit score. Also, having no credit activity in the past 24 months, being new in the country, and lenders failing to report to a credit bureau may also result in a No Credit Score.
2. Does having no credit score mean I have bad credit?
Ans. Not having a credit score suggests you haven’t used the credit yet. It does not indicate that you have poor credit.
3. I have no credit score. How do I have one?
Ans. It would help if you considered credit building for getting a credit score. Apply for loans, credit cards, or other lines of credit. Once you have a score, ensure healthy credit habits to keep increasing your credit score over time. Make all your payments on time, keep credit utilization low, etc.
4. What happens when I don’t have a credit score?
Ans. Without a score, it may not be easy to get credit. Some lenders do not approve a loan application without a credit score, while some provide small loan amounts at a higher interest rate. You can build your score if you get a secured card against a fixed deposit through www.duefactory.com and make regular payments.
5. How do I generate my CIBIL Score the first time?
Ans. Start building your credit by applying for a credit card or loan. Pay monthly dues timely. Ensure that the lenders report your transactions to the credit bureaus. Take the help of www.duefactory.com and pull your credit report to view your credit score.