Does Everyone Start With a Credit Score of Zero?
The short answer is no: There’s no such a thing as a credit score of zero. Credit scores in the U.S. start at 300 and sometimes higher, depending on the scoring system—so you can’t have a credit score of zero. But does this mean that you start with a credit score of 300?
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You Don’t Start at 300 Either
Before your information appears in a credit bureau file, your credit history simply doesn’t exist yet. Once you start to get approved for credit products such as credit cards and loans, you begin to build a credit history.
Instead, when you’re just starting out and do not have a credit score, you are “credit invisible.” In 2015, the Consumer Financial Protection Bureau (CFPB) published a report which showed that 26 million — 1 out of 10 — Americans are known as credit invisible in that they don’t have a credit history with one of the major credit bureaus.
What “Credit Invisible” Means
This is not a derogatory term. Being credit invisible means that none of the three major credit bureaus — TransUnion, Experian or Equifax — has a credit history on you.
That can be because you have never had any credit or loan products to your name or because you pay everything in cash, don’t have a credit card or don’t have access to credit.
Even though you can never have a credit score of zero, when you are credit invisible, the result could be the same when you go to apply for credit: you might be denied.
What Can You Do to Get Noticed by Lenders?
There are a number of ways to “turn the spotlight” on yourself.
Apply for a secured credit card.
A secured credit card is different than a credit card because you provide a deposit to the lender as collateral after being approved for the account. Your payments and credit card information may be reported to the credit bureaus with this type of credit product, and consistent responsible use of the account can work in your favor to help build your credit history.
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Become an authorized user on someone else’s credit card.
If you can become an authorized user with a person who has a good credit history (perhaps a trusted family member such as a parent), that’s a great first step. Of course, this requires a great deal of trust because if the primary account holder does not make on time payments each month, this will likely have a negative impact on your credit score.
While there is no such thing as a credit score of zero, being credit invisible won’t help you much if you’re interested in applying for credit cards or other loans. Fortunately, there are several ways to start building credit history.