What is Your Credit Score With No Credit History?
Can you imagine? If you have no credit history, because you’ve been a good non-borrower, it’s worse than having a crappy credit history.
No Credit History
– a personal story
Our blogger, Justin Benedict, got around his “No Debt” problems by dealing directly with humans in both the broker and the landlord. This is his story:
“I was able to explain to them that I don’t have a score because I don’t like being in debt. At all. On top of that, I can show steady income because I have the good fortune of being employed at a well-paying job. They agreed that made sense and gave me the keys.”
The ordeal made him realize that if he were to deal with an institution instead of a human – a bank from which he wanted a mortgage, say, or even a real estate management company instead of a landlord – he would probably be screwed. So he decided to suck it up, sell out, and finally get his first credit card.
“It turns out I was screwed earlier than I thought. Back when I had a fantastic credit score, I would get credit card offers in the mail by the dozens. So I decided to do the responsible thing and do some research on a good rewards card (might as well get something out of my sell-out) that doesn’t have an annual fee and has a decent APR,” said Justin Benedict.
Having found one, he filled out the online application and waited to hear that his soul had been sold. Not so fast: he was rejected on the spot. It turns out that not having a credit score is just as bad as having a damaged one in the short-term. The bank has no reason to trust that he could handle credit, so it won’t give him any.
“Which means I will continue to be denied credit and continue to have zero credit history.”
Life is full of contradictions.
This situation can be a problem for a lot of people who never borrowed and always paid their bills on time.
“You need to have a credit history to get credit,” says Jennifer Tescher, president and CEO of the Center for Financial Services Innovation in Chicago. “And you need to have credit to build a credit history.”
A history of borrowing money, and then paying it back, is important for getting credit cards or at-the-cash-register store charge cards.
Building a Credit History
In case you were about to panic, don’t. There is a way to raise your credit score.
- Take out a small loan and pay it back on time.Get a secured credit card.Pay your utility bills in full and on time.Get a cosigner to your credit card who has a good credit rating.