Have you ever thought about how credit reports are created and why someone may not have a credit score? Not having a credit score can be very inconvenient especially if there is a need for credit. However, for someone without a credit history, it is an opportunity to build one.

Credit history and score

A credit score is calculated as per the information available from an individual’s credit information on their report. It tends to differ from one CRA (credit referencing agency) to another. The higher the score the better are the chances of getting credit from banks and companies.

Although having a high credit score does not always guarantee that all lenders will instantly issue credit. Some lenders look at the detailed information on the credit report first including past transactions apart from other criteria. They also may have their system of calculating the credit score.

Understanding a Credit Report and Score

There are either of these two reasons for not having a credit score:

• Lack of credit history
• The credit history is very old

Looking at both in detail: For an individual to maintain a credit score, there is the need for a credit report. Likewise having a credit history is vital for a credit report. An individual’s credit history contains the credit data submitted by any of the three CRAs (credit reference agencies) in the UK. Those that have not applied for credit in the country will not have any history, leading to no credit report or score.

For an individual in the UK without a credit history, the reasons are as follows:

Recently moved to the UK

If an individual is new to the country, their earlier credit details cannot be transferred from their country of origin to another country. Despite an individual having a very good credit report and score in their own country, they will have to start from scratch to build their credit history in the UK. Generally, it can take from 6 months upwards for the first credit report to be generated.

Never used credit

There may be some individuals that have not needed to use credit ever or because they are very young. In the case of paying bills in partnership, the name may not appear on bills. Likewise having a mobile contract in someone’s else’s name will not appear on a credit report.

Less than 18 years

For individuals that are below 18 years of age CRAs do not share credit information. Lenders are also unlikely to give credit to those below the legal age because in case of unpaid dues they cannot be taken to court.

Very old credit history

An individual might have had accounts in the UK in the past. However, there was no activity seen on them for a couple of years. In case of closure of accounts, they feature on a credit report for 6 years but after that are no longer seen in the credit history. If you have closed all your earlier accounts and not created any new ones for many years it will lead to not having a credit score. It mostly happens to expatriates that leave the UK for an extended period to live and work in another country.