Is It Possible to Have No Credit Rating?

It is absolutely possible to have no credit rating. People with minimal credit history do not have credit ratings or scores because there is not enough information available to make a balanced assessment of an individual's potential as a credit risk. Having no credit rating can become a problem for people seeking credit, as lenders are reluctant to work with people who do not have a credit rating.

This situation most commonly occurs today with younger people. Young people have short employment histories, may never have had utilities in their own names, and have not yet applied for credit cards or other lines of credit like car and home loans. Older adults who have never made purchases on credit can be in a similar position. If someone has never made a purchase on credit, there is no way to evaluate whether the person makes payments on time and repays loans in full.

A person with no credit rating will have to work harder to get credit. Things like bank accounts, employment history, and utilities can be used to establish some financial history, making creditors feel more comfortable with offering them credit. Cosigning on credit and loans can also be an option. With a cosigner, people can access credit through someone else's credit history, and the cosigned loan can be used to establish good credit. Secured credit is another option to help people build credit.

Having no credit rating is not necessarily the end of the world, as long as someone doesn't need access to credit. People with ample access to cash who prefer to pay for everything in cash, for example, may not need to establish lines of credit. However, not having a credit rating can become a problem for things like booking rental cars and flying commercially, as a credit card may be needed to make a reservation, or special arrangements may be required to be allowed to pay in cash.

Some lenders specialize in making loans to people and companies with no credit rating. The terms of these loans should be reviewed very carefully, as these companies may take advantage of a person's weak credit position to charge high interest and fees or establish highly restrictive terms. While such sources of credit can be useful for people who just need to establish credit in order to build credit history to get a credit rating, they can be dangerous as long-term sources of credit.