Having no credit score can be a major hurdle when it comes to securing loans, renting an apartment, or even getting a job But just how many Americans are in this boat?
According to the Consumer Financial Protection Bureau (CFPB), a whopping 26 million adults (one out of 10) are considered to be “credit invisible”, meaning they have no credit history. This means they’ve never had a credit card, loan, or other line of credit, and therefore, no credit score.
Among young adults, this percentage is much higher—one in five millennials have no credit history. This is probably because owning a home or a car—two of the most popular ways to establish credit—is less common among millennials.
So what does it mean to have no credit score? And how can you build credit if you’re starting from scratch?
What Does It Mean to Have No Credit Score?
A credit score is a three-digit number that represents your creditworthiness. It is predicated on your credit history, which contains details about your prior loan and repayment practices. Your credit score is a tool used by lenders to evaluate your risk as a borrower and decide whether to approve a loan for you and at what interest rate.
If you have no credit history, you won’t have a credit score. This can make it difficult to get approved for loans, as lenders have no way of knowing how likely you are to repay your debts. It can also lead to higher interest rates and fees, as lenders will view you as a higher risk.
How to Build Credit If You Have No Credit Score
The good news is that it’s possible to build credit even if you’re starting from scratch. Here are a few tips:
- Become an authorized user on a credit card. This means that you’ll be added to someone else’s credit card account and will be able to use the card to make purchases. The activity on the account will be reported to the credit bureaus, which can help you build credit. Just be sure to choose someone who uses their credit responsibly and pays their bills on time.
- Get a secured credit card. A secured credit card is a type of credit card that requires you to make a security deposit. This deposit will serve as your credit limit, and you’ll be able to use the card to make purchases just like a regular credit card. The activity on the account will be reported to the credit bureaus, and if you use the card responsibly and pay your bills on time, you’ll be able to build credit.
- Take out a small loan. A small loan, such as a personal loan or a car loan, can also help you build credit. Just be sure to make your payments on time and in full.
- Become a cosigner on a loan. If you cosign on a loan for someone else, you’ll be responsible for the debt if they default. This can be a risky move, so only do it if you’re confident that the other person will be able to make their payments.
- Pay your bills on time. This includes your rent, utilities, and other bills. Paying your bills on time shows creditors that you’re responsible and that you can be trusted to repay your debts.
It can be difficult to have no credit score, but it is not insurmountable. You can begin establishing credit and raise your chances of being accepted for loans and other credit in the future by heeding the advice provided above.
Additional Resources
Disclaimer
I am an AI chatbot and cannot provide financial advice. The information above is not intended to be professional financial advice; rather, it is provided for general knowledge and informational purposes only. A licensed financial advisor must be consulted before making any financial decisions or investing.
Open a line of credit
A credit card is the most popular first product for customers to purchase when they enter the credit market, per the TransUnion study. However, there are also other options available, such as a small personal loan or an auto loan.
However, customers should be aware that they may pay higher interest rates if they have little to no credit history. Minimizing the loan amount and making timely repayments will help keep expenses down while establishing credit. To compare different financial products, you can visit Credible to see your options and get pre-approved in minutes.
Credit invisible population has several options to begin building a credit profile
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.
Consumers have no credit reports when they do not use lines of credit for their purchases. This is typical of younger generations who haven’t started using credit or of people who prefer to pay with cash instead of credit when making purchases. These consumers are often called “credit invisible. “.
When buyers wish to buy bigger items, like a house or a car, but are unable to do so because they do not have sufficient credit history, this can become an issue. Having no credit score at all can sometimes be worse than having poor credit.
Charlie Wise, senior vice president and global head of research and consulting at TransUnion, stated, “Our study clearly points to hundreds of millions of consumers around the globe being credit unserved or underserved.” These credit-disadvantaged customers frequently lack access to financial services and products due to their minimal or nonexistent credit history. This study aimed to ascertain the number of individuals who are genuinely underserved or unserved in terms of credit, as well as ways in which they can obtain additional credit opportunities. “.
You might think about getting a personal loan to help you pay for a significant expense or home improvement project if you want to improve your credit. Visit Credible to compare personal loan lenders and find your personalized interest rate.
What percentage of Americans have no credit?
FAQ
What percentage of Americans have no credit?
Is it possible to have 0 credit score?
What percentage of Americans have a credit score over 800?
Can you live with no credit score?
What percentage of Americans don’t have a credit score?
Another 11% are considered to be “credit invisible,” meaning that they don’t have a credit file with any of the three major credit bureaus. That’s a total of22% of the adult population of the United States that doesn’t have a FICO credit score at all. Here’s what this means, and what you can do if you don’t meet the requirements.
What is the average credit score in the US?
The average credit score in the U.S. was 715 in 2023, increasing by one point from its 714 average in the third quarter (Q3) of 2022. Why Are Average Scores Significantly Higher Than 10 Years Ago?
How many Americans don’t have a FICO® credit score?
A recent report shows that more thanone-fifth of Americans don’t have a FICO® credit score. A recent report by the Consumer Financial Protection Bureau (CFPB) revealed that 11% of Americans have a “thin or stale” score file, and therefore it’s impossible to generate a current, valid FICO credit score for them.
Is the average FICO score a good credit score?
Meanwhile, average FICO ® Scores remain healthy, and increased by a point from 714 to 715 in 2023, which places the average FICO ® Score in the higher end of the good credit score range. A decade ago, the average FICO ® Score was on the lower end of the good range. Why Are Average Scores Significantly Higher Than 10 Years Ago?