How to Live With a Zero FICO Score

A FICO score is what creditors and lenders use to determine whether or not to lend credit or provide financing. In this society and where most everyone purchases items using credit, it is tough to live without a good FICO score. Although it may be tough, it is not impossible to live with a zero FICO score. If you are patient and plan in advance, you can live comfortably with a zero FICO score.

Instructions

1

Begin a savings account. When you have a zero FICO score it is difficult to get credit to purchase large or expensive items or handle unexpected emergencies. Since you don't have the luxury of having credit that means you'll have to use cash. Open a savings account and begin a savings habit. Aim to save at least $1,000 as an emergency fund.

2

Place large deposits on expensive items. It's not impossible to get credit with a zero FICO score, but to do so, you will need to place large up front deposits on big ticket items such as a car. The larger your initial deposit the better your chances for getting financing.

3

Obtain a store credit card. It is easy to get a retail store credit card with little or no credit. The up side to getting a retail store credit card is that it is a vehicle for improving your FICO score. The downside to getting a retail store credit card is they charge high interest rates. If you use the card wisely and demonstrate responsible financial management you can soon graduate from the retail credit card to one that carries a lower interest rate.

4

Apply for new credit slowly. When working on improving your FICO score refrain from applying for too many credit cards at one time. A sudden flurry of new credit inquiries will hurt your credit instead of help it. Wait about three months before applying for new credit.

5

Maintain low credit balances. Once you are approved for new credit cards, refrain from using 100 percent of the available credit. The credit reporting agencies look at your debt ratio when determining your FICO score. Your debt ratio is the ratio of the total amount of outstanding debt to the total amount of credit available to you. They like to see a number of 35 percent or lower. Therefore, if you have $250 credit available to you, don't use more than $87.50 in order to maintain a favorable debt ratio and improve your FICO score.