While most people have a Fico score, there are those who do not.
Yep, not everyone has a credit score, contrary to what you might think.
Why no credit score?
Well, if you’re new to the United States, or simply a youngster with no credit history, there’s a good chance the credit reporting agencies won’t any info on you.
Without any information, credit score creators like Fico and VantageScore won’t have sufficient information to formulate a credit score.
This can be quite the problem if you apply for a credit card, home loan, cell phone etc., as creditors need to ensure you’re a creditworthy borrower.
In order to establish a Fico score, certain requirements must be met.
They are generally as follows:
– You must have at least one credit account that has been open for six months or longer.
– At least one account must have been reported by a creditor to a credit reporting agency within the past six months.
– The credit report must not indicate that you have been reported as deceased by creditors.
Seems pretty simple, right?
Well, sometimes it’s difficult to get that first credit account, given the fact that you don’t have any credit, and lenders want to see your credit history before approving you.
The best way to build a credit history is to open a credit card with the bank you currently do business with.
If they know you’ve got money in the bank, there’s a decent chance they’ll give you a credit card as well, albeit with low limits.
But over time, on-time payments will lead to subsequent approvals, and you’ll be able to apply for bigger loans, such as auto loans and mortgages.
Read more: How do I get my credit score?