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You recently registered with Credit Karma in order to obtain your free credit scores, but there’s a glitch: you don’t actually have any credit scores. What happened?.
Unbelievably, more people than you might imagine have this issue: at least 26 million Americans lack credit scores.
Whether you’re young, new to the U. S. , have minimal credit history, or possess a “thin” credit file, the major credit bureaus might not have sufficient data to generate your credit scores.
What does it mean for you to not have credit scores? Here are five things you should be aware of.
So, you’ve been diligently building your credit history for six months but your credit score remains elusive. Don’t fret my friend, for this guide will illuminate the reasons behind this mystery and equip you with the knowledge to unlock your credit score potential.
The 6-Month Mark: A Milestone, Not a Guarantee
Although six months is frequently cited as a benchmark for generating credit scores, this is not a magic number. Several factors can influence the appearance of your score, including:
- Account Reporting: Even if you’ve had open accounts for six months, they might not be reported to the credit bureaus. Lenders aren’t obligated to report to all three bureaus, so your score might be missing on one or two.
- Recent Activity: Credit bureaus typically look for activity within the past 24 months to calculate your score. If your accounts haven’t been used recently, they might not contribute to your score.
- Credit History Depth: A single account might not be enough to generate a score. Having a mix of credit accounts, such as a credit card and a loan, can provide a more comprehensive picture of your creditworthiness.
- Credit Inquiries: Numerous credit inquiries within a short period can negatively impact your score, making it harder to generate one.
Unveiling the Mystery: Common Reasons for a Missing Score
- New to Credit: If you’re new to the credit game, it might take longer for your score to appear. Building credit takes time and consistent responsible credit behavior.
- Limited Credit History: Having only one or two accounts might not be enough to generate a score. Consider diversifying your credit portfolio with a mix of credit cards and loans.
- Inactive Accounts: If your accounts haven’t been used recently, they might not contribute to your score. Make sure to use your credit responsibly and make regular payments.
- Reporting Delays: Lenders might not report your accounts to the credit bureaus immediately. It can take up to 30 days for your information to appear on your credit reports.
- Credit Inquiries: Excessive credit inquiries can lower your score and make it harder to generate one. Be mindful of how often you apply for new credit.
The Path to Your Credit Score: Practical Steps
- Check Your Credit Reports: Obtain your free credit reports from the three major bureaus (Equifax, Experian, and TransUnion) to ensure accuracy and identify any potential errors.
- Dispute Errors: If you find any inaccuracies on your credit reports, dispute them immediately with the respective credit bureau.
- Become an Authorized User: Ask a family member or friend with good credit to add you as an authorized user on their credit card. This can help you build your credit history without opening a new account.
- Consider a Secured Credit Card: If you have limited credit history, a secured credit card can be a good option. You make a security deposit, and your credit limit is typically the amount of your deposit.
- Use Credit Responsibly: Make your payments on time and keep your credit utilization low (ideally below 30%). This demonstrates responsible credit behavior and helps improve your score.
Remember, building credit takes time and consistent effort. By following these steps and staying patient, you’ll be well on your way to unlocking your credit score and achieving your financial goals.
Bonus Round: Frequently Asked Questions
Q: How long does it usually take to get a credit score?
A: It can vary depending on your credit history and activity. Still, the average turnaround time for a score is between six months and a year.
Q: Can I have a credit score without a credit card?
A: Yes, you can build credit with other types of accounts, such as student loans, auto loans, or secured credit cards.
Q: How often should I check my credit reports?
A: It’s recommended to check your credit reports at least once a year to ensure accuracy and identify any potential errors.
Q: What is a good credit score?
A: A good credit score is generally considered to be 670 or above. However, the specific score requirements may vary depending on the lender or credit card issuer.
You may still have credit reports
Even if you don’t have scores yet, you might have information on your credit reports. Your credit reports are generated by the three major credit bureaus, Equifax, Experian, and TransUnion, using data from card issuers and lenders.
So if you’ve opened a credit account in the past, you probably already have a credit report. However, a score will only appear if your report indicates recent activity, usually within the previous 24 months.
Even if you don’t yet have scores, make sure to regularly review any reports you may have. Reviewing your reports consistently can help you develop a better understanding of your reports as your scores build.
Regular reviews can also help you spot errors or signs of identity theft more quickly. For instance, you might see a credit inquiry that you didn’t authorize or an account that you didn’t open on your report. If you think something is wrong, it’s important that you dispute the error as soon as possible.
You may have no credit scores even if you have open accounts
The number of active accounts on your report is a factor in calculating your scores. Most scoring models look for activity within the last two years. There won’t be any recent activity to generate a score for you if you have closed accounts on your record or had credit in the past but no longer use credit cards.
Furthermore, if your lenders don’t submit reports to the credit bureaus, you might not have scores even if you have recent credit activity. Lenders are not required to report to any of the bureaus; they may choose to report to one, two, or none at all. Your open account will not appear on a credit bureau’s report if it hasn’t been reported to them.
Make sure the card issuer or lender reports to all three major bureaus before applying for any kind of credit if your goal is to improve your credit. Potential lenders won’t be aware of your good credit habits if your lenders don’t report your on-time payments to all three of these bureaus.