How do credit reference agencies create credit reports? And why don’t you 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.
Understanding your credit 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 reference agency 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 credit reports and credit scores are and how they work together.
Why you don’t have a credit score
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 credit provider reports information about you to one of the UK’s three credit reference agencies - Experian, Equifax and CallCredit. So, if you’ve never used credit in the UK, 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 the UK
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 the UK. 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. 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 reference agencies 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, because lenders can’t sue you if you don’t pay.
- current accounts (if they have an overdraft)
- credit cards
- personal loans
Your credit report may also include other types of credit account. However, this will depend on whether your lender reports to Experian, Equifax and CallCredit at all. Not all lenders do. These accounts could include:
- utilities (gas, electricity and water)
- entertainment bundles (TV, phone and internet packages)
- mobile phone contracts
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 UK 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 the UK 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 UK address. Unfortunately, if nothing comes up, you’ll need to rebuild your credit history from scratch.