The Zero Credit Score: A Lofty Goal or Foolish Decision (2024)

FAQs

The Zero Credit Score: A Lofty Goal or Foolish Decision? ›

Whether you choose to go for the zero credit score or not depends on your personal financial goals—such as one day taking out a mortgage on a home. No matter what you decide, monitoring your credit history on a regular basis is a smart move. Time to take control of your credit? Get started today!

Fortunately, no one's credit score can equal zero – the range for FICO scores is 300-850 – and even people with poor or bad credit have a credit score of at least 300. A “no credit score” means there is insufficient information for a credit score calculator to compute a score.

First off, it's important to understand that credit scores of zero do not exist.

Having no credit is better than having bad credit, though both can hold you back. Bad credit shows potential lenders a negative track record of managing credit. Meanwhile, no credit means lenders can't tell how you'll handle repaying debts because you don't have much experience.

If you are invisible to the financial system, it means there is not enough information about you on your financial track record. It's known as having a 'thin' or no credit file. This usually means that either you have very few credit accounts, haven't used credit for a long time or have never used it at all.

More than 45 million consumers are considered unserved or underserved in the U.S., meaning they have little to no credit history, according to a new TransUnion study.

The fastest ways to increase your credit score include paying bills on time, becoming an authorized user, increasing credit limits without increasing your balances, and paying off debts. Keep in mind, however, that it may take several months to see significant improvements in your score.

Yes, it's possible to buy a house without credit. Even for those without an established credit history, there are options available. Alternative methods like cash offers, FHA loans with nontraditional credit or manual underwriting may be worthwhile strategies for buying a home with no credit.

Whatever your reason for wondering how long it takes to get a credit score, you can generally expect it to take about six months – and usually longer to get into the good-to-exceptional credit score range.

It generally takes three to six months to get your first credit score, although the time it takes to build good credit is different for everyone. It depends on factors like what your credit scores are now, how you're managing debt and more.

Can you live with no credit score? ›

Life without credit isn't impossible. But you'll probably have an easier time if you start building up your credit now. (In the meantime, if you're considering a bad credit loan, you'll want to check out the OppU Guide to Bad Credit Loans here.)

As a general rule, graduate and professional schools are likely to consider a grade of Credit as equivalent to a grade of “C” and a grade of No Credit as a “Fail.”

Forgoing credit cards can make it difficult to build a decent credit history with a good credit score.

Various weighted factors mean that even with no credit, your credit score could still be low because the length of your credit history or credit mix, for example, could also be low.

Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.

Ramsey believes that a life lived without credit — and thus debt — is the best way to live, because then you are always living within your means. He recommended you pay off your debt, avoid adding new debt, which includes any kind of loans, and essentially let your credit score “dwindle until it's completely extinct.”

Having no credit score makes it more difficult to access financing for anything from a cellphone to a car or home. Even if you don't plan to borrow money in the near future, having a good credit score can still make life easier in a number of ways: Get access to favorable credit terms.

Paying on time every month, keeping your credit utilization low and having a mix of different credit can help build your scores over time. If you have little or no credit history, it may take three to six months of credit activity to get your first credit scores.