Q&A: Is it Possible to Have a Zero Credit Score?

Q: Is it possible to have a zero credit score?

A: No, it isn't possible to have a zero score. The FICO score ranges from 300-850. There are many other scoring models, too, but none of them offer a zero score. So if someone says they have a zero score, then they don't understand how scoring works. Without a history, you simply don't have a score at all.

How Do You Get a Score?

Once you open an account, whether it's a loan or a credit card, you begin to build a history. Your payment history will start showing up on your reports. However, there's a lag time between opening an account and building your history and getting a score.

It might sound odd, but you do need to borrow money to build a score. It takes about six months of making payments on at least one account. For example, if you get a card that reports to the major bureaus, your payment history gets reported. Payment history is a huge part of your score, so it's important to make your payments on time. In fact, it's best to use the card for small purchases only as you learn how to manage your account. Then pay the small balance in full by the due date. After you make payments for about six months, you'll generate a FICO score.

Once you have a history, it helps when you want do things such as rent an apartment. Without a history or score, even if you get approved, you might be asked to make a larger deposit because you're perceived as a risk.

So what can you do to establish a score? Here are a few options:

Get a Secured Card

To build (or re-build) your FICO score, consider a secured card if you can't get approved for an unsecured card. Make sure that the issuer reports your payment history to the three main credit bureaus -- Experian, TransUnion and Equifax. Here's how a secured card works: to "secure" the card, you make a deposit into a bank account. In return, you'll get a card that looks like an unsecured card. It doesn't say "secured" on the card, so there's no stigma attached. The security deposit stays in your account, so you're actually using a credit card when you buy merchandise.

Your limit on the card is often the amount of the deposit, but there are some issuers who will approve a consumer for a partially-secured card. For instance, you might deposit $49 and get a $200 limit.

Use the card responsibly, and after about six months, you'll have a score. From that point, work on improving your score. This means a low balance and paying your bills--all of them--on time.

Become an Authorized User

If you have a parent, relative, or generous friend, this might be a good option for you. This isn't quite as effective as having your own account, but you can still benefit from being an authorized user. The term "authorized user" refers to a person allowed to use a credit card but who is not required to make payments. For example, a parent might make a college student an authorized user on her account iso that her child has access to cash in the event of an emergency.

However, you don't need to use the card (or even know what the account number is) to benefit from it. When you're an authorized user, the account holder's payment history is picked up on your credit report and becomes part of your score!

You have to make the right choice, though. If you become an authorized user on an account owned by someone who wiho pays on time, you get a "halo effect" from that. His or her good habits help you build a history. But make the wrong choice and your friend's bad habits could actually drag your score down. The impact is temporary if you remove yourself from the account. But while you're trying to build your history, you don't want to have to overcome any road blocks.

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