[M]any people hear that they have bad credit, which means they haven’t always been responsible with their credit accounts. However, it is another situation entirely when a person is told they have no credit. You may wonder how that’s possible and what it really means for your future.
No Credit Doesn’t Mean Never Any Credit
If you are told you have no credit from a lender, it doesn’t mean you’ve never had any credit. What it does mean is that you don’t have any credit accounts showing on your credit report. This could happen because it’s been too long since you’ve used any credit.
Even negative information falls off of credit reports after a certain length of time. It is usually seven years but can be as long as ten years. If you haven’t had any credit accounts after this time, it may appear as if you’ve never had any credit.
Another reason for showing no credit is if you’ve changed your name or are applying in a different name.1 For instance, you may be applying as a new business instead of as an individual. Your business has not established any credit even though you have personally.
Another reason for no credit is your credit may be too new. Some creditors don’t report to the credit bureaus until you’ve had an account for six months. During this time, it will seem like you don’t have any credit.
What Can You Do?
If you’ve been told you have no credit, make sure you haven’t had any in the recent past. You can then work to establish your credit. You may want to start out with a credit card designed for people who are seeking to build credit. You may qualify for a small personal loan which will also be added to your credit history.
Work to establish positive history during this time so you will show good or excellent credit once it finally reports.