I don't have a credit score

What happens if you don't have a credit score? Read on to find out.

• Not having a credit score is common for people who haven't used credit before
• Not having a credit score means there is little or no credit history available to assess your borrowing behaviour. This is not the same as a bad credit score, which is calculated from negative events on your record
• You may still be able to access some financial products without a credit score, though options could be limited
• Building credit from scratch involves starting with basic credit products and maintaining good financial habits
• ClearScore provides free access to check and monitor your credit score as you build your credit history

If you don't have a credit score in Australia, it means you haven't established a credit history yet through borrowing money or using credit products. This differs from having a bad credit score, though having no credit history may still limit your access to financial products and could affect lending decisions. While this can limit some financial opportunities initially, you can start building your credit history through various methods including starter credit products, small personal loans, or credit builder products.

Having no credit score means that credit reporting credit reporting bodies like Equifax or Experian don't have enough information about your borrowing history to calculate a credit score for you. Most people start out their financial lives with no credit history or score at all, and it is common for young adults, new arrivals to Australia, or anyone who has relied only on bank accounts and savings.

Several factors can explain why you might not have a credit score:

• You've never used credit products: If you've never had a credit card, personal loan, mortgage, or other credit products, there's no payment history for credit reporting bodies to evaluate.
• You're under 18: In most cases, credit files are linked to adult identity details, so under-18s usually won't have a score.
• You're new to Australia: Recent immigrants may not have established credit history in the Australian system, even if they had good credit elsewhere.
• You've only used cash or debit: Using savings accounts, debit cards, or cash for all purchases doesn't contribute to credit history.
• No recent credit activity: If you haven't used credit products in recent years, your credit file might become inactive.

Understanding this distinction is crucial for your financial planning:

No credit score means there's insufficient data to create a score. You're essentially starting fresh with lenders, which can be both limiting and an opportunity to build positive history.

Bad credit score indicates a history of credit management issues like late payments, defaults, or bankruptcy. This actively works against you in credit applications.

The impact of having no credit score versus a poor credit score may vary depending on your individual circumstances and the lender's assessment criteria. In some cases, having no credit score may be viewed more favourably than having a poor credit score, as you haven't demonstrated risky financial behaviour.

Your credit score tells the story of your financial reliability, and understanding it is the first step to taking control of your financial future. With ClearScore, you can access your credit score and full credit report completely free, updated weekly, for life.

Here's what you get:

1. See your credit score and report, always free Access your complete credit report from Experian, giving you a comprehensive view of how lenders see you. Check your score anytime, anywhere, with no hidden fees or charges, ever.

2. Understand what affects your score Get clear insights into what's helping or hurting your credit score. Track payment history, credit utilisation, account age, and recent searches. See exactly which factors are making the biggest impact on your score.

3. Spot errors and opportunities Review your credit report weekly to catch mistakes that could be dragging your score down. See all your credit accounts, payment history, and any searches in one place, updated regularly so you're always in the know.

4. Get personalised tips to improve Receive tailored guidance on how to build your score over time. Whether you're starting from scratch or working to improve an existing score, you'll get actionable steps matched to your situation.

Why choose ClearScore for credit monitoring?

• Free forever - Track your score and report with no fees, no trials, no catches
• Monthly updates - See changes to your credit report every month, not just once a year - and check your app whenever you want!
• No impact on your score - Checking your own score won't affect your credit rating
• Take control - Understand your financial health and make informed decisions about credit

Your credit score affects everything from mortgage rates to mobile phone contracts. With ClearScore, you can track your progress, spot opportunities to improve, and build the financial confidence to reach your goals.

Even if you don't have a credit score yet, there are ways to build credit. But always remember, you should only take out credit if you can manage the repayments.

Check your credit file and fix any errors

Before you start building credit, make sure you actually have a credit file and that the information on it is correct. Sometimes mistakes like wrong addresses, incorrect default listings, or duplicate accounts can affect your score. You can review your credit report for free and dispute any errors you find with the credit reporting body.

Apply for a low cost credit card

Getting a low cost or low interest credit card is one of the best ways to build your credit score. You can add recurring monthly payments to your credit card and pay the bills when your statement is generated.

This way, you would be using the card regularly and, in turn, building a positive credit history on your credit reports. Just make sure to always pay your credit card bills on time and keep your credit utilisation below around 30% of your available limit.

Disclaimer: The 30% figure is a general guideline rather than a strict requirement for Australian credit scores.

In case you have been having problems getting approved for a credit card due to the absence of a credit score, you can also look at credit cards for bad credit. When you're starting out with no credit history, it's better to focus on getting approved for a manageable product rather than chasing the lowest interest rate.

Apply for a small personal loan

You can also apply for a small personal loan or credit builder loan to get a new line of credit and, in turn, build your credit history. But just like a credit card, you have to make sure you are paying off your loan instalments on time and never missing any of the monthly payments. Only borrow what you can comfortably repay.

Diversify your debt

Your credit history and score are based on many factors, and one of the main factors is your credit mix.

Credit mix refers to the different types of credits that you use at a time. This can include:

• Personal loans
• Home loans
• Car loans
• Mortgages
• Credit cards

When you have a variety of credit types in your mix and manage them responsibly, it can help keep your score healthy.

Become an authorised user

In case you haven't been able to get approved for new credit, you can also ask your family members or spouse to add you as an authorised user on their credit card. This can help you build credit history through their card.

Though keep in mind that if you or the main owner of the credit card fails to pay the card bills on time, it can affect both of your scores negatively. Take a look at what happens if you don't pay your credit card bills on time.

Keep credit applications to a minimum

Multiple credit applications create multiple hard enquiries on your credit file, which can lower your score. These enquiries can stay on your file for years, so it's best to only apply for credit when you genuinely need it and have a good chance of approval.

Starting your credit journey doesn't have to be overwhelming. By understanding what it means to have no credit score and taking practical steps to build credit history, you can work towards better financial opportunities. Remember that building good credit takes time, but the foundation you create now may benefit you for years to come.

Ready to start building your credit score? With ClearScore, you can check if you have a credit score and begin monitoring your progress for free. Receive ongoing access to your credit report and personalised tips for improvement, you'll have the tools you need to build strong credit from the ground up.

Disclaimer: This article provides general information only and does not constitute professional financial advice. Credit reporting and lending in Australia are subject to laws and regulations that may change. Individual circumstances vary, and you should consider seeking professional advice before making financial decisions. Information is accurate at the time of writing and may change.