Do I have bad credit history?

[Adam]

I’ve never taken any loan, and have never applied for a credit card or a line of credit.

However, I do have a few unpaid utility bills, some of which have gone to collection agencies.

Dose this mean that I do have a credit report? Do I even have a credit score?

And if I don’t have a credit report yet, but start using credit – will these items find their way onto my credit report even though they occurred before I’ve started establishing credit?

[Tracy Winters]

You probably already have a very bad credit score

You may not be aware of it, but you have already established credit. Only problem is that you have established BAD credit.

The unpaid bills that went to collection agencies WILL find their way onto your credit report – and are bound to have an adverse affect on your credit score. You can expect to have a very bad score for the next two years. After that time it will start to improve, but will still be much below average.

You should be concerned because of two reasons:

First – These collection accounts will remain there for 7.5 years, so you’re looking at a very long time with poor credit score and everything that follows: You won’t be able to get loans, credit cards, you may also experience trouble renting a home. Your insurance rate will not be favorable etc.

Second – Even the unpaid bills that DIDNOT go to collection are affecting you at this very minute. For people with thin or no credit history (i.e. yourself) Fair Isaac has developed a new credit score – FICO Expansion Score.

This score is very different from the standard FICO score. Because it cannot use conventional credit history (which you lack), it uses unconventional sources like… utility bills, cellular bills, medical bills… installment purchase plans etc.

You as a consumer have no access to this score, but you can be pretty sure that your unpaid utility bills have already havocked it.

[Author]

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