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You’ve just signed up for Credit Karma to get your free credit scores, but there’s one problem: You have no credit scores. What happened?
You might be young or new to the U.S., or maybe you don’t have recent credit activity. Because your scores are based on information in your credit reports, your reports might not contain enough credit history for the bureaus to score. And it’s more common than you might think: At least 45 million Americans don’t have credit scores.
If you don’t have scores, what does it mean for you? Here are five things you should know if you don’t have credit scores.
- You may still have credit reports
- You may have no credit scores even if you have open accounts
- You have fewer options for credit
- Having no credit score doesn’t mean you have bad credit
- It can take time to build a credit score
Even if you don’t have scores yet, you might have information on your credit reports. The three major credit bureaus — Equifax, Experian and TransUnion — create your credit reports based on information from lenders and card issuers.
So if you’ve opened a credit account in the past, you probably already have a credit report. But you’ll only see a score if your report shows recent activity — generally within the last 24 months.
If you have reports, be sure to check them on a regular basis even if you don’t have scores yet. Reviewing your reports consistently can help you develop a better understanding of your reports as your scores build, says Ken Chaplin, TransUnion senior vice president.
Regular reviews can also help you spot errors or signs of identity theft more quickly. For example, you may notice an account on your report that you didn’t open, or a credit inquiry that you didn’t authorize. If you think something is wrong, you can dispute the error.Get your free credit score updates
The number of active accounts on your report is a factor in calculating your scores. According to Chaplin, most scoring models look for activity within the last two years. If you’ve had credit in the past but no longer use credit cards, or you have closed accounts on your report, there won’t be recent activity to produce a score for you.
And even if you have recent credit activity, you still may not have scores if your lenders don’t report to the bureaus. Lenders might only report to one bureau, two bureaus or none at all, but they aren’t required to report to any of them. If you have an open account that isn’t reported to a particular bureau, you won’t see it on that bureau’s credit report.
If you want to build your credit, before you apply for any type of credit, be sure the card issuer or lender reports to all three major bureaus (Experian, Equifax and TransUnion). If your lenders don’t report your on-time payments to all three of these bureaus, potential lenders won’t see the healthy credit habits you’ve established.
Without a score, it’s more difficult — but not impossible — to get credit. Lenders like to see that you’ve borrowed money and paid it back on time in the past, which means you typically need credit to get credit.
If you don’t have a credit card, Chaplin says it’s important to use other forms of credit or loans to show your ability to make on-time payments and manage debt. If you take out a student loan and make regular, on-time payments, this can help build your score.
But if you’re not getting approved for other forms of credit, a secured card may be an option. You put down a security deposit to open the account, and your credit limit is typically the amount of your deposit. With responsible credit use, you typically qualify to get your deposit back after a certain period of time.
You could also ask a parent or someone else you trust to add you as an authorized user on one of their credit cards. When you’re an authorized user, activity on that card typically appears on your report as if it’s your own card.
Not having a score may suggest you haven’t needed to use credit yet, which isn’t necessarily a bad thing. And it’s not an indicator that you have poor credit. In fact, once you get a score, it may be better than you think. A 2016 study of more than half a million Credit Karma members from 2008 to present shows that members who initially did not receive a TransUnion score later achieved an average first score of 639.
Once you have a score, your credit habits contribute to whether it increases or decreases over time, so it’s important to make all of your payments on time once you’re able to get your first credit card or loan.
Chaplin says there’s no set amount of time it takes you to get a score. Many factors contribute to your score, including your payment history and how long you’ve had credit.
“Building credit means showing your ability to repay debts over a period of time,” Chaplin says. “Once you’ve established credit by getting a loan or opening a credit card account, you’ll begin building your credit history as you pay bills.”
Based on the study conducted in 2016, Credit Karma found that members who started with no score took an average of five months to receive a score.
If you’re new to credit, new to the U.S. or have few open credit accounts, you may not have a credit score. It can take a little while, but with consistent, responsible credit use, you’ll likely eventually see a score.