The reasons why you might not have a credit score

Being told you don’t have a credit score or report can be frustrating. But don't worry - it's actually a great opportunity to build a great credit report and score from scratch.

Understanding the two main reasons why you might not have a credit score will help you understand your financial situation better. Then you can start taking steps to build up your score.

First things first, here’s a quick refresher.

A credit score is a three-digit number based on your credit report. Your score can vary from one credit bureau to the other. But, as a rule of thumb, the higher the number, the more attractive you are as a borrower to banks and other lenders.

At the same time, a high credit score isn’t a guarantee you’ll be accepted for credit. Lenders look at the information on your credit report, but also at your application form and at any past dealings you may have had with them. Many also have their own credit scoring criteria.

Here’s a more detailed explanation of what a credit report is.

If you don’t have a credit score, it’s usually down to one of these two reasons:

1. You don’t have any credit history

2. Your credit history is too old

Let’s have a more detailed look at each.

You don’t have any credit history

It may sound obvious, but in order to have a credit score you must have a credit report. And to have a credit report, you must have credit history.

Your credit history starts when a credit provider reports information about you to one of Canada’s credit bureaus. The two most commonly known bureaus are Equifax and TransUnion. So, if you’ve never used credit in Canada, you won’t have a history. Which means no credit report and no credit score.

If you don’t have a credit history, you probably fall into one of these three categories:

1. You’re new to Canada

Credit reports and credit scores cannot be transferred from one country to another. Even if you have an excellent credit score back home, you’ll still have no score if you’re new to Canada. It can take up to six months to generate your first credit report and score.

2. You've never had a credit account in your name

You may have simply never used credit before, such as a loan or credit card. This could be because you're young, or just haven't needed to.

Even if you pay joint bills, it could be that your name doesn't feature as one of the account holders. Similarly, if you have a mobile phone contract but it's not in your name, it won't show on your credit report.

3. You’re under 18

Credit bureaus don’t usually disclose your credit report and score if you’re under 18. In any case, it’s unlikely you’d be allowed to take out credit if you’re under age.

Your credit history is too old

The second reason you might not have a credit score is essentially the opposite of the first. You’ve had Canadian credit accounts in the past. But too much time has passed since you last had one open.

When you close a credit account, it remains on your credit report for 6 years. However, after 6 years, it will no longer appear. So, if you close all your credit accounts and don’t open any new ones, you may eventually not have a credit score anymore. Typically, this happens to people who leave Canada and settle down elsewhere.

If this sounds like you, you can check whether there’s still anything on your credit report using your last known Canadian address. Unfortunately, if nothing comes up, you’ll need to rebuild your credit history from scratch.