Can you have a 0 credit score?

Answer 1

Yes, you can have a 0 credit score, at least in the United States. This answer only pertains to credit scoring in the US, but other countries may have similar processes. Your credit score, also called your FICO score, is generated by the three credit reporting agencies, TransUnion, Experian, and Equifax. Normally, an individual's score ranges from 350-850, and is based on the following formula:

• Payment history (35% of the rating)
  
• Length of credit history (15%)
  
• New credit (10%)
  
• Types of credit used (10%)
  
• Debt (30%)

Source: Fair Issac Corporation

As you can see by the breakdown of how the score is calculated, 100% of the score is based on how you interact with credit and debt. Factors like income, employment history, cash savings, and good history with monthly bills to landlords and utilities has NO bearing on the credit score.

That being said, there are generally three reasons why your credit score is 0:

1. You have many outstanding and delinquent or old debts that have caused your score to drop below 300, which usually then defaults to 0.
   
2. You have little or no credit history at all. You have done very little no borrowing on a credit card, school loan, car, house, etc., and therefore the FICO formula has nothing to base your score on.
3. You have borrowed money in the past, but have since closed all your accounts with no outstanding balance, and no longer use credit cards or own any debts. You score has slowly eroded over time and all accounts have fallen off the report.
   

Pulling a copy of your credit report from the three reporting agencies will generally tell you if your 0 score is due to the first reason. If this is the case, you should clean up or settle your old debts, and this will likely raise your score over time. Some things, like bankruptcy or a foreclosure, will stay on your report for many years before falling off.

If you fall under the second or third reason, and have never borrowed money, or have not borrowed any money in at least a year, CONGRATULATIONS. You have been living within your means and have not needed to borrow money, which is very difficult to do this culture that promotes the idea that you must have a great credit score to survive. Do not go out and open a credit card just because people tell you to "build your credit." If you don't borrow money, then why do you need credit?

Sometimes having no credit score will make things like renting an apartment, renting a car, or getting good rates on insurance a little more difficult. That's because most people and companies equate a credit score with being a financially responsible person, and that simply is not always the case. But if you have MONEY, and can put down a larger deposit for things like an apartment or car rental, and people will usually work with you. You can even get a mortgage with no credit score if you find a company that does manual underwriting. This means they will actually look at factors like income and rental history in granting you a mortgage, instead of just a FICO score.

In summary, having a 0 credit score isn't a bad thing, unless you have old outstanding debt that needs to be cleaned up. Your life doesn't need to revolve around credit and debt, which is what a credit score is calculated on. If you live on less than you make and save money to pay cash for things like cars, you won't need a credit score.