A credit score is a numerical value based on the information on a person's credit report, which includes data from mortgage loans, credit cards, lines of revolving credit, student loans and other forms of credit and borrowed money. Credit scores range from 300 to 850, with low numbers indicating bad credit and high numbers indicating good credit.
Credit Score Number
A person with no credit history -- that is, no information on his credit report for the past six months -- has a credit score of "zero," which some lenders and credit specialists refer to as "no credit score." Although it falls outside of the standard 300 to 850 range, a zero score does not indicate "bad credit," only that a person has no recent credit activity.
Impact
Although a zero score is not technically "bad credit," it has a negative impact on a person's chances of getting a home loan, credit card, line of credit, car loan, private student loan or any other form of credit. This is because an individual without a credit history is an unknown to banks and lending institutions -- they do not know if such an individual will repay her debts in a timely manner or allow them to go into default.
Comparison to Bad Credit
Although both a zero credit score and a poor -- below 620 -- credit rating will prevent a person from getting access to loans or credit lines, having no credit history is better than having bad credit. This is because a bad credit score impacts a person in other ways, including preventing her from getting a job, leasing an apartment or setting up utilities in her name. Businesses and agencies believe a poor credit score shows irresponsibility, while they do not have such an impression from someone with no credit.
Considerations
A person with a zero score must build a credit history before applying for a mortgage, private student loan or standard credit card. She can do this by signing up for a secured credit card, which people without credit histories can obtain. A secured credit card is a line of credit backed by a deposit equal to the card's limit. A person who uses such a card sparingly and pays off the balance monthly will see her credit score increase into the "good" -- above 620 -- range.
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