I haven't used credit in over 10 years and my score says unavailable. Why?
If you haven't used credit in more than 10 years, your old accounts have most likely dropped off your credit report by now, which means there's nothing in your credit history to score.
Credit scores represent the information in your credit report. Most credit scoring models need at least one or two active credit accounts to generate a credit score. They also typically require activity for the last three to six months.
Why You May Not Want to Stop Using Credit
You didn't mention why you haven't used credit in over ten years, but one reason some people stop using credit as frequently is retirement.
Retirees who have paid off major debts such as their mortgage and car loans may find that they no longer rely on or use credit as frequently as they once did. They may not realize that when they do need credit, their previous credit history may no longer be available.
Even if your financial situation is solid, you will need at least a couple of active credit accounts in your name to have a good credit score. This does not mean that you need to carry debt.
Simply making small purchases on a credit card and paying the balance in full each month will demonstrate to lenders that you are managing credit responsibly. There is no need to charge large amounts or to carry a balance from month to month.
One important factor in credit scoring is your credit utilization rate — the lower, the better. Therefore, keeping your credit card balances low throughout the month and paying the balance off in full each month is ideal. This way, you can ensure that you are not getting caught paying interest fees and that you are not accumulating debt.
Establishing Your Credit History
Since you stated you haven't used credit in 10 years, you may find that you are essentially starting from scratch when it comes to building credit. If your credit report is a blank slate and you are having trouble qualifying for an account on your own, here are some steps you can take to begin building your credit history:
- Open a secured account. With a secured card , you deposit a certain amount of money into a savings account, and in return you receive a credit card with a credit limit that is a percentage of the deposited amount. Use the account a little each month to make small purchases and then pay off the balance in full to demonstrate that you can manage credit well.
- Ask a family member to cosign. Having a trusted person cosign for you can get your foot in the door and help you begin re-establishing credit. Keep in mind that the account will impact both you and the person who cosigns, and you will both be responsible for any balance on the account. For example, missing a payment will negatively affect both your credit score and theirs.
- Sign up for Experian Boost™† . Experian has a new service called Experian Boost that can help you improve your credit scores instantly by including your positive utility and cell phone payments in your Experian credit report. Those payments can then be factored into your FICO scores.
You can find more information on building and re-building a strong credit history on our blog.
Thanks for asking,
Jennifer White, Consumer Education Specialist
This question came from a recent Periscope session we hosted.