Not having enough credit information in your credit profile can be just as bad as having a low credit score. When you have an insufficient credit history, the credit agency's credit scoring formula cannot compare you to other lenders. The only way to get out of this zone is to continue using credit.
Identification
The most popular credit scoring formula, the FICO model, requires a certain amount of data before it can adequately rate you as a credit risk. Even if you have an account, the model may not "feel" you have enough history to compare you to other lenders, according to Maxine Sweet of Experian, one of the major bureaus in the U.S. Consumers need at least six months of credit history to have a credit score.
Considerations
Once you have enough credit history for the credit bureaus to calculate a score, you need to continue using it. You must have at least one creditor update your report in the past six months to calculate a score. Thus, if you let all of your accounts go dormant, your score will come back as "insufficient credit history."
Effect
Lenders will likely not offer you much credit or credit at a reasonable interest when you have no credit score. They want to know that you have experience paying back a line of credit. The credit bureaus actually use about 10 different scores for various demographics, such as new borrowers or people going for a mortgage, so it is possible you do not have a enough credit history for a certain loan.
Tip
You may have some accounts the credit bureaus do not list, because the lender has yet to send in the information. Ask your creditor if it minds adding your accounts to your credit profile. Start using a dormant credit card again by putting a small charge on it. If you want to acquire a new creditable account, try a secured credit card. These are low-risk, because the lender requires a security deposit, according to Bankrate.
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