Why Do I Have No Credit Score?
There are many reasons why you might not have a credit history. Read on to find out what to do if you don’t have one and simple ways to start building your credit score.
If you have no credit score, you may find it more tricky to get accepted for financial products, such as loans, mortgages and credit cards. That’s because lenders have little evidence to show how well you manage borrowing money. Here, we explain why you have no credit score and what to do if you have no credit history.
It’s possible that you have no credit score for several reasons, including:
- You are under 18: Your credit score isn’t usually available until you are 18 years old.
- You have never used credit: If you have never used credit or don’t have any bills, such as energy, water or a mobile phone contract in your name, you won’t be able to build a credit score.
- You are new to the UK: If you have recently moved to the UK, you may not have a credit report and score, even if you have an excellent credit history in your home country.
- Your credit history is too old: If you close a credit account and don’t open any new ones, your credit score may no longer appear on credit reference agencies’ databases after six years.
» MORE: What affects your credit score?
Why is your credit history important?
Lenders often look at your credit history whenever you apply for financial products, such as credit cards, loans or mortgages, to assess whether you are a reliable borrower. Having little or no credit history means lenders have no evidence to show that you have a good track record in managing your money. This means that there could be a higher risk that you might be unable to keep up with repayments.
What can I do if I have no credit history?
You can build up your credit history in the following ways:
- Register to vote: Registering to vote is a simple way to improve your credit score because lenders use the electoral roll to prove your identity and where you live. It also helps to combat identity fraud. You can find out whether you are eligible to vote and if you are, you can register to vote online in a matter of minutes on gov.uk.
- Put utility bills in your name: Having utility bills, such as energy, water and mobile phone contracts, in your name may help improve your credit history. That’s because utility bills are a type of credit agreement, so keeping up with repayments demonstrates to lenders that you can manage your finances and repay your debt on time.
- Use credit responsibly: Using a small amount of credit regularly can help to improve your credit score. Ideally, you should try to keep the amount of credit you use (also known as your credit utilisation) below 30%, or below 25% if at all possible. Your credit utilisation is calculated by dividing your available credit card limit by your debt. For example, if you have a credit card limit of £1,000 and you use £500 per month, your credit utilisation is 50%.
- Repay debts on time: Your credit history will improve if you make repayments on time. That’s because it shows lenders that you are a reliable borrower and can manage your money well. Missed or late payments can damage your credit score and stay on your credit file for six years.
- Keep an eye on it: You can check your credit score via one of the three main credit reference agencies, – Equifax, Experian and TransUnion – or some online banks offer the ability to check your credit score. By looking at it you can see how the above tips have affected your credit score.
It’s important to note that improving your credit history takes time. And in some cases, it may take around three to six months to build up a credit history.
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Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more