Your credit score is a number based on your credit history. Credit reference agencies use data from your credit history to give you a score to rate how well you’ve managed credit in the past.
However, you don’t have one universal credit score. The UK’s credit reference agencies – Equifax, Experian and TransUnion – all keep financial information about you that can be used to calculate a score for you in slightly different ways. But if you have no credit score with one, it’s likely that this will be the case with the others, because the three agencies hold similar data.
If you have no credit score, you may find it trickier to get accepted for financial products, such as loans, mortgages and credit cards. Lenders will have little evidence to see how well you’ve managed credit in the past.
Why don’t I have a credit score?
Not everyone has a credit score. It’s possible that you have no credit score for several reasons, including:
- You’re under 18. Your credit score isn’t usually available until you’ve reached this age.
- You’ve never used credit. If you’ve never used credit or don’t pay any bills in your name, such as energy, water or a mobile phone contract, there won’t be much data available to base your score on.
- You’re new to the UK. If you’ve 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, the information will stay in your credit file for six years, after which it disappears. If you don’t have any other open credit accounts, there may not be enough data to generate a credit score for you.
» MORE: What affects your credit score?
Is it bad to not have a credit score?
If you don’t have a credit score you may be credit ‘invisible’, which means you don’t have a credit history, or your credit history is too ‘thin’. It can be a problem if you’re planning on borrowing money.
Lenders usually look at your credit history whenever you apply for financial products, such as credit cards, loans or mortgages, to assess whether you’re a reliable borrower. Having little or no credit history means lenders have no way to see how well you’ve managed your debts in the past. They may believe there’s a higher risk you’ll be unable to keep up with repayments, and you could struggle to be accepted for credit compared with those who have a good credit score.
If you want to build a credit score you can start by getting a free credit report to see what data – if any – a credit reference agency is using to work out your score. Then you can take steps to build your history, which should improve your score.
While it can be difficult to be accepted for credit if you don’t have a credit score, it’s not impossible. For example, bad credit loans are designed for people with a limited or poor credit history, or credit builder credit cards could help you establish a credit history.
However, these products often come with higher interest rates and lower credit limits, because lenders believe it’s riskier lending to people with no credit history.
If you’re thinking about applying for any type of credit, you should only apply for what you need and make sure that you can afford the repayments. If you fall behind, this will damage your credit score.
» MORE: Can I get a loan with no credit check?
How do I build my credit history if I have none?
There are a number of ways to build your credit score, which involves establishing and maintaining a credit history. However, improving your credit history can take time – in some cases, it may take around three to six months to build up a credit history. Here are some steps you can take.
Being on the electoral roll is recorded in your credit file and can improve your score, because lenders use the electoral roll to prove your identity and where you live. It also helps to combat identity fraud.
Having utility bills in your name, such as energy bills, water and mobile phone contracts, may help improve your credit history. Utility bills are a type of credit agreement, so keeping up with repayments helps to show lenders that you can manage your finances.
Opening a bank account and making regular payments by direct debit can help you make your payments on time, which can build your credit history. Getting approved for an overdraft can improve your score too, if you manage it well.
Keeping credit card balances low and not using too much of your available credit can improve your score. It helps to show that you’re not financially stretched and that you don’t rely on credit.
If you don’t have a credit history, you may find it easier to be approved for credit builder credit cards.
Making repayments on time helps to show lenders that you’re a reliable borrower who can manage your money. Missed or late payments can damage your credit score and stay on your credit file for six years.
When you apply for credit it’s usually recorded on your credit file. While the outcome of the application isn’t directly recorded, too many applications over a short time can signal to lenders that you rely on credit to meet your obligations.
There are services you can use to check your credit score. These include the credit reference agencies Equifax and Experian, as well as ClearScore (which uses Equifax data) and Totally Money (which uses TransUnion data).
It’s a myth that checking your score will damage it – you can check your score and report as many times as you like without harming them.
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