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    11 Things Anyone Who Doesn't Have A Credit Score Yet Needs To Know

    Don't worry, you won't start at zero.

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    Oh, credit scores. Nobody loves thinking about them, but they're truly so important. If you ever want to rent an apartment, take out a car loan, or even apply for certain jobs, having healthy credit scores can open a lot of doors for you.

    But if you haven't used credit before (or if it's been more than six months since you've touched it), it's possible that you don't have credit scores at all. If that's you, here are 11 things you need to know:

    1. First of all, you should know that you can have multiple credit scores, but your FICO score is likely the one you'll want to pay attention to.

    Credit report showing a 540 credit score
    Courtneyk / Getty Images/iStockphoto

    Since there are three credit bureaus (Experian, Equifax, and TransUnion) that compile consumer information into credit reports, your credit scores can vary depending on which credit report is used. For example, if a bill in collections appears on only two of your reports, your credit score based on the third report will be higher.

    Plus, there are a bunch of different credit scoring models out there, like the VantageScores that many finance apps show. If you're in the US, your FICO scores are often the ones that are most likely to get pulled by a creditor when you apply for a loan or line of credit, though that has been changing during the pandemic. If you want to see if you have a FICO score (or watch it grow as you work on your credit), you can check it through your bank or create a free account with Experian.

    2. And your credit scores will be calculated based on information from your credit reports.

    Pie chart showing the five factors that go into your FICO credit score
    myFICO / Via

    Here's a breakdown of how the info from your credit report will go into your FICO credit score:

    Payment history counts for the biggest chunk of your score at 35%. Pay your credit card bills and loans on time, every time, and you'll be well on your way to solid credit scores.

    Credit utilization, or how much of your available credit you use, counts for 30%. Ideally, you'll want to keep your credit utilization as low as possible.

    Length of credit history, or how long you've had accounts open, counts for another 15% of your score. The longer you have accounts open, the better for your scores, so it can be a good idea to start building credit sooner rather than later.

    Credit mix, or how many different types of credit you have, makes up another 10% of your score. It's not a huge part of your score, so don't feel pressured to take on loans or credit just to improve this factor. 

    Finally, new credit makes up the last 10%. This factor looks at how often you've recently applied for new loans or credit. One application every six months is usually OK, but more than that can make you appear risky to lenders and hurt your score.

    3. Building healthy credit scores from scratch takes time, but you won't be starting from zero.

    FX / Via

    In the FICO credit scoring system, scores can range from 300 on the low end to 850 at the highest. When you don't have a credit score, that means that there's not enough information on your credit report to calculate one — but you probably won't start at the bottom. Instead, you'll likely start somewhere in the middle. Just so you know, these are the credit scoring ranges:

    • 300–579: Poor

    • 580–669: Fair

    • 670–739: Good

    • 740–799: Very Good

    • 800–850: Exceptional

    Credit scores go up and down all the time, so don't sweat it if your first score is "Fair" or "Poor." Once you have credit, there are plenty of things you can do to improve your credit scores.

    4. You need to use credit to build your credit score, but your options are limited when you don't have a score yet.

    CBC / Via

    When you don't have a credit score yet, lenders and financial institutions don't have a lot information about your borrowing habits to help them decide if they want to lend you money or not. This can make it really hard to open a credit card or get a loan on your own. But it's not impossible. There are a few different things you can try if you want to start building your credit.

    5. A secured credit card can be a great way to start your credit journey.

    Woman holding a credit card and looking at her laptop
    Drakula & Co. / Getty Images

    Secured credit cards are designed to help people who don't have credit (or who have lower scores) start building a positive credit history. When you open a secured credit card, you make a refundable deposit up front that's equal to the card's credit limit; so if you put down $200, then you'll have a $200 spending limit on your card. The credit card company holds this deposit as collateral, in case you build up debt that you're not able to pay off.

    If you make timely payments and keep your balance low, then you'll be building a positive credit history. One easy way to do this is to just put one small regular bill on this card, like a streaming subscription, and always pay it off in full every month. In time, you might also get the opportunity to convert the account to a non-secured card and get your initial deposit back.

    6. Or you might consider a retail credit card, but watch out for high interest rates.

    NBC / Via

    Retail credit cards are another common first line of credit, as they often don't have as many requirements to qualify. If there's a store where you tend to spend money regularly anyway, like maybe Target or Costco, then you might consider applying for a credit card with that retailer. These cards often offer some nice discounts or other deals, but be careful to pay them off in full each month, if you can. Retail cards come with higher interest rates, so if you carry a balance, you'll end up paying more for your purchases than you planned. 

    7. Try reporting your rent, utilities, or other regular bills to the credit bureaus.

    8. If you need to take out a loan or open a credit card, you could ask a trusted loved one to co-sign for you.

    Fox / Via

    You can get around not having a credit history by asking a parent, spouse, or close friend with solid credit to co-sign for you on a loan or credit card. When you use a co-signer, they agree to take on responsibility for your debt if you can't pay it. Also, their credit scores can take a hit if you make payments late or run up a big balance. 

    It's a really big favor to ask someone, so be as open and honest as possible with your potential co-signer about your financial situation. Once you have your credit card or loan, make your payments on time to start building a healthy credit score.

    9. Or you can piggyback on someone else's high credit scores by becoming an authorized user on one of their accounts.

    Netflix / Via

    Asking to be an authorized user is another big favor, but it can help give your thin credit history a boost. As an authorized user, you get added to someone else's credit card account as a secondary user — which means that info about their account like payment history, credit utilization, and account age can start to show up on your credit reports. And you don't even necessarily have to use their card for this info to get added to your reports.

    Keep in mind that this kind of arrangement requires a lot of trust on both sides, and the account holder might want to set up some ground rules before making you an authorized user. And you should also know that if the main account holder gets behind on their payments, your new credit scores can suffer too.

    10. Credit builder loans can be another great option for building up your scores.

    11. Finally, don't obsess over your credit scores, but do keep an eye on your credit reports.

    Got any questions about credit scores? Share them in the comments to keep the conversation going.

    And for more money tips and tricks, check out the rest of our personal finance posts.