In this brief guide, we are going to discuss what to do if you have no credit history. If you just said to yourself  “I have no credit history” then this guide helps you learn how to build credit and get access to credit products.

What does it mean when you have no credit history?

If you have no credit history then thing such as getting credit( mortgages, loans, homeowner loans or credit cards), getting a job or renting a house will be very hard.

These things each require some level of credit.

If you have no credit this means that a credit file cannot be found for you as you have either somehow avoided everything used to generate a credit file or maybe you have just moved to ac country and haven’t passed the minimum time needed for credit to be built.

In the United Kingdom, you will need to have lived in the country for at least 3 years to have any chance of building credit.

When you have no credit there will be no data returned if you tried to search for your credit file. 

This does not mean that you have a negative credit score.

It simply means that you have no established credit record. Most credit providers translate this as meaning you have bad credit.

You will need to build credit by doing various things in order for you to get access to credit.

Having a good credit score is the best thing if you want to get access to fair credit or the best rates.

If you have no credit history you will have to deal with:

Higher deposit requirements

higher interest rates

Limited lenders

How to build credit if you have no credit history

If you have no credit history then building credit will be the main thing you need to do. Your credit history is very important when looking to get credit as lenders use it to determine your creditworthiness based on how have repaid previous credit accounts.

To build credit for the first time you will need to do a few things.

Open a bank account

When you have no credit history, opening a bank account is the most basic thing you can do if you want to build your credit history. By opening a bank account you will have a data supplier which sends data to the credit bureaus.

This is because banks send data on all bank accounts which are opened to the credit bureaus and this is logged on your credit file.

You may not be able to see your credit file if you have recently moved to the country and it is less than 36 months since you moved but worry not, your credit file is slowly beginning to take shape behind the scenes.

Put your name on a utility bill

Some utility bill providers such as gas& electric providers or mobile phone contract providers will report your repayment data to the credit bureau.

Before getting a phone contract or switching to a gas and electricity provider you can ask the provider if they report the repayment data to the credit bureau and only sign up to a provider who will.

You should note that although you may not be able to see or access your credit report, any missed credit repayments could ultimately end up showing on your credit file.

If you have no credit history then you should certainly get a utility bill provider who reports data back to the credit bureaus.

Get on the electoral roll

If you have no credit history you should get on the electoral roll. The electoral roll data is managed by each local council and the data is collected by the credit bureaus periodically.

Getting on the electoral roll is the easiest way to begin establishing a credit file in the UK.

Be an authorized user on your parent’s credit card

If you have no credit history then you can aim to become an authorised user on your parent’s credit card or your sibling’s credit card. 

By being authorized n a credit account this credit account will show up on your credit file too and this will help you establish your own credit history.

You should be aware that if you are an authorised user on a credit account any positive or negative reports on that credit account will be posted on your own credit file.

You should only choose to be an authorised user on a credit account where you are sure the user will repay any borrowed credit on time.

Sign up for a secured credit card

If you have no credit history then signing up for a secured credit card will be a very good way to build your credit history.

A secured credit card is a card which allows you to spend on it and repay the funds back like every other credit card. The only difference is that the funds you are spending will usually be deposited as security by you.

In some cases, you may need to deposit 100% of the credit limit as security or maybe less.

Secured credit cards were designed for those who have no credit history so they could use these cards to build their credit.

Secured credit cards may have a monthly fixed charge attached to them.

A secured credit card will help you build your credit history if you make your monthly credit repayments on time.

Get a credit builder credit card or credit-builder loan

If you have no credit history then you may want to get a credit builder card or credit-builder loan.

A credit builder credit card is similar to a secured credit card but the only difference is that you won’t have to put a deposit or the total credit limit down as security

A credit builder credit card will help you build your credit score if you make your monthly credit repayments on time.

A credit builder loan works under the same premise. It is a loan which you take out a but isn’t actually handed to you but you will have to make the monthly credit repayments in order to build credit.

At the end of the loan term, you will get back all your monthly loan repayments paid to you by the credit builder loan provider.  In the UK Loqbox is one of the only credit builder loan providers.

How to get credit with no credit history

If you have no credit history and need a credit product you may find it very hard to get but there are a few things you can do to get credit even if you have no credit history.

There are a few tips you can use to increase your chances of getting credit even if you have no credit history.

Manual underwriting

Manual underwriting is one of the ways you can look to improve your chances of getting credit if you have no credit history.

If you have no credit history then manual underwriting will greatly improve your chances as the lender will take more time when assessing your credit application and will assign an underwriter who you can communicate with to send additional documents to prove your affordability for the credit product.

Manual underwriting is more common when looking to get a loan or mortgage.

Without manual underwriting, you will usually just get an automated decision from a computer which matches you against the lenders internal scoring criteria.

If you don’t meet the lenders internal scoring criteria you will usually be automatically rejected.

In the other hand, with manual underwriting, you get a chance to prove your affordability to the lender and hence a very good option if you have no credit history.

Get a guarantor 

If you have no credit history then you could consider getting a guarantor to guarantee the credit you want to take out.

A lender may be more willing to lend you if you have a guarantor and hence this may improve your affordability for the credit product.

If you default on the credit then the lender will seek to recover any outstanding balance from your guarantor.

Put collateral down

If you have no credit history then putting collateral down may increase your ability to get credit.  

This is usually the case with mortgages, loans and even credit cards (in the form of secured credit cards)

If you default on the credit then the lender could seize your collateral and look to sell it to recover any outstanding balance.

Get a cosigner

If you have no credit history then getting a cosigner to cosign the credit product you want to take out may increase your affordability to the lender.

You should note that the cosigners credit file may now display the credit account and any missed payments on your credit file will also show on theirs and hence affect their credit score.

Get a job

If you have no credit history then getting a job and having a regular income will ensure you are looked upon more favourably by lenders.

Use a credit eligibility checker

If you have no credit history then you will want to use a credit eligibility checker when applying for credit products such as mortgages, loans or car finance.

A credit eligibility check will usually be carried out using a soft credit check.

A credit eligibility check lets you know if you will be eligible for a credit product or not before you make a full credit application.

Check your credit score

If you have no credit score then you will periodically want to check for your credit report to see if it has finally popped up.

You can check your credit history from one of the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report

FAQs: I have no credit history

Is it worse to have no credit or bad credit?

Bad credit and no credit are looked upon by most lenders as the same. Bad credit will usually take 6 years to get better while having no credit history will mean that you can establish a credit score in about 36 months.

In that case, having no credit history is better than having bad credit.

In this brief guide, we discussed what to do if you have no credit history. If you ever thought to yourself  “I have no credit history” then this guide would hopefully have helped you learn how to build credit and get access to credit products.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.