Is No Credit Better Than Bad Credit?

There’s a lot of information out there about bad credit, and how to improve it. But what does it mean if you don’t have any at all? And is no credit better than bad credit? CreditNinja can help you figure it out. 

There are several reasons why you may not have any score at all. In fact, according to the Consumer Financial Protection Bureau, there are roughly 45 million Americans without a score. While having no score may not be as bad as having a low score, it can still make life difficult until you start building your borrowing history through a personal loan, credit cards or other sources. 

Read on to learn how this happens, how to get a score, and the best ways to improve your score. 

I Have No Score—What Does This Mean?

When people talk about “good vs. bad credit” they’re referring to your borrowing history. Your score is based on your past borrowing and payment habits, and it shows lenders whether or not you’re trustworthy. 

There are three main companies that calculate your score: Experian, TransUnion, and Equifax. These companies compile all of your past borrowing and payment information and boil it down to a three-digit number called a “credit score.”

Credit history with higher scores are better, and they tell lenders that you can pay back your loans. Lower scores make it difficult to get loans with favorable interest rates. Having no score on the other hand, is a completely different situation. 

Not having a score just means that you haven’t had a loan, a credit card, or any payments in your name. Since there’s nothing to show on your report, there’s no score. Without credit history, it can make it difficult to get loans since you have no proof that you’re a trustworthy borrower. 

Good Credit, Bad Credit, No Credit

Your score is usually broken down into a few levels: exceptional, very good, good, fair, and poor. The following breakdown is for your FICO score. A FICO score is created by the Fair Isaac Corporation, which gives borrowers a score between 300 and 850.

  • 800–850: Exceptional score
  • 740–799: Very good score
  • 670–739: Good score
  • 580–669: Fair score
  • 300–579: Poor score

Having no credit probably won’t be considered as bad as having a poor credit score by lenders. A poor score is a proven track record of bad borrowing habits. No score just means you’ve never had any accounts in your name. 

If you’re able to find a company or lender that will extend you a loan, then you can start with a good score by making all of your payments on time. 

Can I Get a No-Credit Credit Card or Loan?

There are lenders that will still offer you a loan even if you don’t have a score. The only downside is that they may charge you high interest rates since they can’t be sure you’ll repay the loan. 

Here are a few loan options to consider if you need to build a score from scratch:

Get a cosigner — A cosigner is a person that signs onto the loan with you, and agrees to make payments if you aren’t able to. Typically they would need to have a good score for you to be approved. 

Look for secured loans — A secured loan means you have to offer collateral. In the case of a title loan, the collateral is your vehicle. But beware, if you can’t repay the loan, the lender will seize your vehicle and sell it. 

Apply for a secured card — These are similar to a regular card, but you provide some money up front, and they give you a card with a limit typically equal to that amount. This allows you to make payments and build a score without risking much. 

Whatever option you may choose, the important thing to remember is that making payments on time and keeping your overall debt low will help build your score. Learn more about improving your score in the CreditNinja Dojo!


45 million Americans are living without a credit score