The Fabled FICO Score of Zero: What to Do if You Have No Credit, But Need a Loan

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Normally, credit scores run from 300 to 850, but there is an exception to the rule: a score of zero. It’s not as frightening as it sounds. A zero doesn’t mean you’re a reckless spender—a score of 350 probably would. It simply means that creditors don’t know what to do with you.

To have a score at all, you need to play by the rules, which include carrying and paying off debt. To have a good score, you need to have debt. Yes, it sounds counterintuitive, but, to creditors, you haven’t proven your borrowing abilities if you’ve paid off loans as quickly as possible and then ceased any further interaction with debt. To them, you’re guilty until proven innocent, and therefore they assign you a score of zero.

That score is no matter if you expect that you’ll never rent an apartment—instead you’ll buy one outright—or take out an auto loan—rather, you’ll pay in full and up front. Chances are, though, you’re not that lucky. But don’t fret. There’s plenty you can do.

If you know or expect that you’ll need to take out a loan in the near future, you should open a credit account immediately. The best credit cards, with top-notch rewards and benefits, however, won’t yet be within your reach. Many of those rewards cards require excellent credit, so don’t bother filling out the application for an American Express Platinum.

You can get your hands on a secured credit card. While they’re marketed to bad-credit consumers, they can accommodate you, too, as they don’t require a credit history to apply. One of our favorites is the Capital One® Secured MasterCard®.

Capital One Secured MasterCard Credit Card

Capital One® Secured MasterCard®

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  • Qualify with limited / bad credit
  • No annual fee
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  • No rewards
  • High APR

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Annual Fee


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  • APR: 24.9% (Variable)
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Card Details

  • No annual fee, with all the credit building benefits
  • Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
  • Free access to your credit score and learn how everyday decisions can affect your score using Capital One® Credit Tracker
  • Your minimum security deposit gets you a $200 credit line
  • You may qualify for a credit line increase based on your payment history and creditworthiness with no additional deposit required
  • Easily manage your account 24/7 with online access, by phone, or using our mobile app
  • It’s a credit card accepted at millions of locations worldwide

You can also try your local credit union. These not-for-profit institutions are often the friendliest to no-credit consumers, and they can open a secured card or a different type of loan so you can build some credit.

 Credit reporting: Be sure to check!

Make sure, however, that your credit union reports to all 3 major bureaus, as not all do. You can use GoFreeCredit’s PrivacyGuard to check your credit scores from all three bureaus, then canceling within 30 days to avoid the $14.99 monthly fee.

“A company has to pay to report—and if they choose not to report at all they can hurt their clients,” said Hallie Hawkins, a certified credit report reviewer. “I have a client who had an OK credit score a few years ago. I warned him that since he had moved all his credit cards, mortgage and auto loans to a credit union that reported only to 2 of the credit reporting agencies, one of his scores will be substantially lower than the rest.”

And, in the future, Hawkins’ client may face higher interest rates: If a lender uses a score from that third agency, they won’t see any data about his borrowing with that credit union.

You can learn from his mistake: make sure your lender reports, make your payments on time and you’ll be fine.

  • pnwfemale

    Toyota Financial services gave me a car loan and I made the final payment last month. I applied for Capital One’s Credit Access card to help rebuild my credit; but, was declined. Funny thing is, I had excellent credit before I got married. Once single, I had to rebuild my credit again. Now, it seems that credit card issuers only look at the credit score instead of credit history. Student loans should not count against somebody.

  • nationalslave

    I just received a rejection letter for a small personal loan. I actually expected it since my credit was affected by long term unemployment. What shocked me was the fact that I was rejected based on “No credit file/history, 0 credit score. Why is this? I currently have a collection agency calling me and I paid off a car 4 years ago. My rating isn’t great but it shouldn’t be “0”. What to do, I need help. Bank says it happens alot due to a glitch from Experian. I may have to move in the near future and this really scares me, having a “0” score. Help

  • Mike Arienti

    Budget smartly. Get out of debt. Save often. It’ll take time and sacrifices but you’ll be in a position where you could be issuing loans instead of applying for them.