3 Unexpected Problems With Not Having a Credit Score

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Your credit score is an important number for borrowing money, whether in the form of a mortgage, auto loan, or spending limit a credit card issuer gives you. That number tells lenders how risky -- or trustworthy -- a borrower you are. The higher it is, the more likely you are to get approved.

Now, as you might imagine, having poor credit could result in being denied a loan or credit card. But the same thing might happen if you have no credit score at all.

As of 2022, an estimated 45 million Americans didn't have a credit score, according to the U.S. Government Accountability Office. And usually, the reason for not having a credit score is that you don't have enough of a credit history for one to be established. This could be the case if you never took out a loan or credit card before, and therefore have no documented history of making payments to a lender.

But while an absent credit score might hurt your chances of getting a loan or credit card, the consequences go beyond that point. Here are some surprising problems with not having a credit score.

1. You may have a hard time getting a cellphone

Most people today need a cellphone to function. But if you don't have a credit score, you may not be allowed to pay off a new phone over time. And if you can't afford the full cost of a phone outright, that's a problem.

You may also have trouble getting a cellphone contract for service. However, you generally won't have an issue getting a prepaid plan since, well, you're paying upfront.

2. You might struggle to rent a home

The last thing a landlord wants is to rent to a tenant with a history of falling behind on payments. That's why landlords commonly run a credit check when vetting tenants who apply to live in their homes.

If you don't have a credit score, you may have trouble getting approved to rent a home -- even if you have great references from former landlords. You may have to agree to make a larger security deposit, or pay a few months of rent upfront, to be allowed to sign a lease in that situation.

3. You could run into issues when you apply for life insurance

Buying life insurance is a great way to protect your loved ones financially. But without a credit score, you might have a harder time qualifying for an affordable rate.

It's common for life insurance companies to run credit checks as part of the application process. On the one hand, you'd think a credit score wouldn't matter in the context of life insurance, since it's not as if you're borrowing money, but rather, paying for a product. But many insurers use credit score information to help establish premium rates.

How to build credit if you have no score

Establishing a credit history is sort of a catch-22. You can't get approved for a loan or credit card without a credit score. But you can't get a credit score if you have no loans or credit cards in your name and therefore can't prove you're capable of paying on time. It's frustrating, right?

The good news is that there are some steps you can take to build a credit history so a score can be established for you. And one of the easiest is to get a secured credit card .

With a secured credit card, you put down a deposit that serves as your credit limit. Then, as you make timely payments on that account, it gets recorded as positive payment activity on your record.

Another option may be to get added as an authorized user to a family member's long-standing credit card account. That way, the payment history on that card is associated with your credit file.

If you happen to be renting a home despite not having a credit score, another option is to ask your landlord to report your timely payments. It's not standard practice for rent payments to be reported to the credit bureaus the same way mortgage payments are. But there are third-party products, like RentRedi, that make this possible.

If you don't like to borrow money, you might assume that it's no big deal not to have a credit score. But clearly, that can become a problem in more ways than one. It pays to do what you can to build a credit history.

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