Is there a credit score worse than a poor credit score?

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Some consumers have no credit at all – which is also not a great thing.


the main points

  • Poor credit can be an alienation for lenders.
  • Often, no credit has a similar effect.
  • You can build credit with a secured credit card.

Your credit score says a lot about you. If this number is strong, it sends a message that you are a relatively low-risk borrower. For this reason, you are more likely to get approved to borrow money, whether in the form of a car loan, personal loan, or mortgage.

If your credit score is poor, it sends the opposite message – that you are a riskier borrower. With poor credit, you may be denied access to a loan when you need it. Or you might get stuck with a higher interest rate on any loan you end up getting.

It is clear that a higher credit score is at least better. But what if you have no credit score at all? If you are new to the world of work and have never had invoices in your name before, this may be the case. But it may, unfortunately, lead to a world of difficulties.

No balance problem

Obviously, not having a credit score is not the same as having a poor credit score. But in practice, both may have similar consequences.

If you don’t have any kind of credit history, lenders won’t have a way to gauge a borrower’s risky profile. Thus, you may end up rejecting various loans as a result.

Having no credit score at all can make it difficult to rent a home. Landlords usually perform credit checks on potential tenants before agreeing to let them sign lease agreements. If you have poor credit, you may be denied rent, because the landlord may not want to risk you. But if you don’t have credit, you may get a similar result.

How to build credit

If you don’t have a credit score, there are steps you can take to create a credit history — and an appropriate history at the time. One option is to apply for secured credit card. With a regular credit card, you are given a spending limit based on factors such as credit score and income. With a secured credit card, you make a deposit that represents your spending limit. As you charge the expenses on that card and pay your bills on time and in full, they are recorded as positive activity on your credit history.

You can also see if you can be added as an approved user on a family member’s credit card. This way, any positive activity associated with this account (such as timely payments) will be transferred to your credit history.

Not having a credit score at all can be, in many cases, as annoying as poor credit. If this is the boat you’re in, it pays to do your best to establish a credit history as quickly as possible. At the same time, be sure to take steps to maintain your credit score as soon as you are able to establish one. This means paying all bills on time and keeping your credit card balances low once unsecured credit cards are approved.

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