Don't have a credit score? Learn what that means.

What does it mean to have no credit?

"No credit" can be an ambiguous term—what does it mean to have no credit? Does it mean you don't have any credit history at all? Or that you have a 0 credit score, and is that even possible?

Essentially, having no credit can mean that you don't have an existing credit score or credit history. Low credit, on the other hand, means you have a credit score, but it's low.

In this article, you will learn about:

• The differences between no credit and low credit
• How to get a credit card or a loan with no credit
• Ways to establish credit

Differences between no credit and low credit

No credit means you don't have a credit score that exists—you don't have a credit history or a credit score on record. While this isn't necessarily a bad thing, it's not exactly beneficial, either.

No credit

Having no credit means you don’t have enough credit-related activity to generate a credit score. A “no credit score” means there is insufficient information for a credit score calculator to compute a score. Lack of a credit score, also known as credit invisibility, indicates an absence of an active credit report at the credit bureaus. This shows that you don’t have active credit accounts reported, or that your history is too limited to calculate a score.

It's possible to pay for transactions with cash, but having a credit score can help unlock opportunities for important purchases in life. Your goal as a smart consumer could be to start small and begin using credit wisely in order to build your credit score and demonstrate to lenders your creditworthiness.

Low credit

Having a lower credit score, on the other hand, means you do have an existing credit score and history. However, that credit score lands in a specific, poor range. This range depends on the scoring model used. For VantageScore^® 3.0, a range of 300-600 is considered a very poor credit score, and 601-660 is considered poor. For the FICO^® score, a poor credit score falls in the 300-579 range.

Remember that your credit score (or lack thereof) does not translate to your worth or value as a human. Rather, it's a tool used to indicate your level of risk when it comes to lenders allocating funds to you. Your score can help you get better annual percentage rates (APRs), higher credit limits and unlock other opportunities to achieve your goals in life.

How to get a credit card or a loan with no credit

Generally, it's difficult to get either a loan or credit card with no or bad credit. However, you can jumpstart your credit experience by first becoming an authorized user. An authorized user is someone who is permitted to use someone else's credit card account. The payment history of that account gets reported to the three main credit bureaus—Experian™, TransUnion^® and Equifax^® —impacting the authorized user’s credit. Positive financial behaviors conducted by the primary cardmember (like paying the full amount on time) can positively impact your credit score. As an authorized user, the card's history becomes a part of your credit history.

Additionally, there are credit cards available for those who are just starting to establish a credit history, so you can also take out a credit card in your name as a way to help establish credit and build your score over time. Your first credit card may not come with ideal rates and your credit limits will be strict, but the more you showcase your ability to make your payments on time and make healthy financial choices, the better your chances are of improving your financial options in the future.

Be prepared to provide some documentation when you take out a credit card or a loan. As part of the application process, you may be asked to provide the following and more:

• Proof of income (pay stubs)
• Proof of identity (driver's license, passport)
• Proof of your residence/mailing address (utility bills)

Once you've been approved and open a line of credit, you'll begin establishing credit and can start building up your credit score over time with regular, on-time payments.

Ways to establish and build credit

If you've just taken out your first credit card—congratulations! You're on your way towards building up your credit. But because you don't start with a high score right away, you may be wondering—how do I improve my credit score and build my credit over time?

To understand how to do this, it's helpful to get a grasp on the factors that affect your credit score. These factors, depending on the scoring model used, include, but are not limited to: payment history, credit utilization ratio, credit age and credit mix.

To help establish and build credit, you might want to consider doing some of the following:

• Paying off more than the minimum amount due towards your credit card payments each month
• Maintaining your credit utilization ratio to 30% or less
• Diversifying your portfolio by opening a new line of credit
• Enrolling in Chase Credit Journey^® to monitor your credit score and set score goals

Bottom line

Having no credit does not indicate something negative. Credit scores and establishing your creditworthiness are ways to help unlock future financial possibilities.

While you may not need a high credit score today, think about your future and what you may want in the next 5, 10, 15 or 20 years. Do you see yourself buying a car? A home? Planning for these life milestones ahead of time can save you the hassle of having to scramble to establish a good credit score at that time.