Building credit history and establishing a credit score is an important part of your financial journey. If you’re new to credit cards, you may be curious about your own credit score. But does everyone have a credit score? To put it shortly, no — though there may be advantages to having one. Let’s learn more.
What goes into a credit score?
Your credit score is calculated using the information on your credit report. Things like your salary or bank account information don’t show up on your report, and therefore aren’t part of your score. Factors that do appear on your credit report include the following categories:
- Payment history: Your payment history includes late payments, how late they were, how long ago the payments took place and how many late payments have been reported. Bankruptcies, foreclosures, repossessions and collection accounts may also damage your payment history. However, if you’re making at least your minimum payment on time each month for all your accounts, your payment history may reflect that, too.
- Amounts owed: This category includes your credit utilization ratio, as well as how much debt you have, how the debt is distributed across different types of accounts (such as credit cards, student loans, mortgages or car loans), and how many accounts you have that are carrying a balance.
- Age of credit history: This category will look at the age of your credit accounts, not your personal age. This means it will factor in the ages of your newest and oldest accounts, the average age of all accounts combined, how long each account has been open and when each account was last active.
- New credit: New credit consists of any new hard inquiries into your credit report, how many new accounts you have and what date the new accounts were opened.
- Credit mix: Like the name implies, credit mix looks at the diversity of accounts you have. For instance, it will look for things like credit cards, mortgage loans, auto loans and installment loans, among other types of accounts.
If you don’t have any loans or lines of credit, you may be asking: is it possible to not have a credit score?
Is it possible to not have a credit score?
In short — yes, it’s possible to not have a credit score. You may even have some information in a credit report, but if the accounts aren’t active, you may still not have a score. There’s a common myth that you are assigned a credit score at birth or when you receive a Social Security number, but that’s not the case. There are a few reasons why you may not have a credit score, such as:
- You haven’t had time to establish credit yet, possibly due to only recently becoming eligible for credit.
- You’re new to the U.S.
- You don’t have any recent credit activity.
- You have a “thin” credit file, meaning you don’t have enough information to calculate a score.
Credit scoring models typically need at least one or two accounts, with activity for the last three to six months, to calculate a credit score.
Can you check your credit if you don’t any?
Yes, if you don’t have a credit score or any credit accounts, you can still check your report. To do this, you can visit the websites for the three major credit bureaus, Experian™, Equifax® and TransUnion®. You can also visit annualcreditreport.com for an annual copy of your credit report.
Benefits of having a credit score
There are several reasons you may want to work on your credit score. Here are just a few:
- Interest rates: If you ever want or need to borrow money (for a mortgage or auto loan, for instance), you’ll likely get better interest rates with a higher score. Additionally, you’ll likely find it easier in general to be approved for financing if you have a well-established credit score.
- Credit checks: Some landlords like to do credit checks before renting out a home to reduce the risk of a tenant not paying rent. Having a solid credit score may make it easier to find a rental the next time you move. Some employers may also run credit checks (with your consent) during the hiring process. Note that a hard credit check will cause a temporary decrease in your score.
- Insurance costs: Your home and auto rates sometimes factor in your credit score, meaning you may get a cheaper rate if you have a better score.
Tips for establishing credit
You may be wondering: Is it possible to not have a credit score and enjoy a full life? The answer is yes, of course. However, if you’re interested in the benefits having a credit score might confer, there are a few simple steps you may want to take to establish your credit history and start improving your score.
- Get a secured credit card. Though you’ll want to note that Chase does not currently offer secured credit cards.
- Apply for a credit-builder loan.
- Use a co-signer.
- Become an authorized user on a family member’s credit card.
- Develop responsible habits, such as paying bills on time.
In summary
Credit scores are calculated using the information from your credit report. But does everyone have a credit score? Not necessarily. If you have never opened any lines of credit or haven’t actively used previously opened accounts for some time, you may not have a credit score. If you’d like to get one, however, there are a few simple steps you can take to get started on establishing your score, which may offer you more financial opportunity.
