If I've Never Owned a Credit Card Can My Credit Be Bad?

Credit cards play a large role in determining your credit rating, but other factors are important, too. Your credit rating can be good or bad, even if you have never owned a credit card. Other factors, including account types, financial activities and, possibly, identity theft, can affect how the major credit bureaus rank your creditworthiness.

Credit Cards

Credit card companies let you borrow as much or as little as you like, up to a preset limit, and expect repayments over time or for you to pay the full balance all at once. These types of loans appear on your Experian, TransUnion and Equifax credit reports. They can negatively affect your credit rating if you skip payments or send the money late. But credit card debt is not the only type of debt that can affect your score.

Collection Accounts

Several credit-related debts can affect also your credit rating. Such accounts include medical and cell phone bills as well as motor vehicle tickets and library fines. If you become delinquent on these bills, a collection agency may come after you. Collection-agency accounts negatively affect your credit rating if the agency reports you to Experian, TransUnion and Equifax. When these companies determine your credit score, they factor in bills in collections, according to the MyFICO website. In fact, these bills make up 25 percent of the credit score.

Rental Payment

Apartment rental payments can affect your credit score if you rent a unit from a landlord or management company that reports your data to the credit bureaus. Experian, for example, includes your rent payment history on its reports, according to a 2011 Los Angeles Times article. You can build your credit by paying the rent on time, but lenders who pull your Experian records will view you unfavorably if you are a chronically late payer. Keep in mind, however, that your rental history has no effect if your landlord does not provide the data to the bureau.

Repossessions

Car loans are collateralized by the vehicles. As a result, some creditors finance auto loans for people without credit cards or extensive credit histories. Just the same, your credit score will drop if you stop paying your car loan and wind up having it repossessed. The Federal Trade Commission warns that most car loan contracts allow repossession of the auto as soon as you default. The action is then reported to the credit bureaus.

Identity Theft

An identity thief can trash your credit rating -- without your knowledge -- even if you have never obtained credit cards or loans legitimately for yourself. These criminals can use your name, Social Security number and other personal data to open credit card accounts, which they use until they are caught or reach the spending limit. You find out when bill collectors call or you pull your credit reports and see the fraudulent accounts. Federal law allows you to get free credit reports from all three bureaus every year, according to the FTC. Order them from the official site, AnnualCreditReport.com, and review them for unrecognized accounts. Contact the police and creditors, and ask Experian, TransUnion and Equifax to put fraud alerts on your reports, if you find suspicious data.