topic Re: Is it possible to have nothing on your credit report after having loans or CC's? in General Credit Topics

Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Sat, 06 Oct 2018 06:21:27 GMT

Out of curiosity, what happens if you close all loans and credit cards? Will you revert back to "no credit" or will your history continue to stay on your credit report and you will continue to have a credit score?

Re: Is it possible to have nothing on your credit report after having loans or CC's?

Anonymous — Sat, 06 Oct 2018 08:37:31 GMT

Closed accounts typically stay on your reports for 10 years. If you closed all of your accounts and didn't open any for a decade, in theory all of your accounts would be gone in 10 year, so there would be nothing left to your file and therefore no way to generate a credit score.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

Anonymous — Sat, 06 Oct 2018 15:07:52 GMT

BBS is absolutely right about what would happen to your reports. As touches your FICO scores, there are two requirements:

(1) One account at least six months old (closed or open)

(2) One account that has reported in the last six months

If each closed account stopped reporting once the creditor reported it as closed (i.e. no further updates to the bureaus) then #2 would fail to be met at month 7 or possibly 8 and you'd lose your FICO scores.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Sat, 06 Oct 2018 20:19:48 GMT

So I’m understanding that your credit report will still show those accounts, but I won’t have a FICO score? Are they separate?

Re: Is it possible to have nothing on your credit report after having loans or CC's?

Anonymous — Sat, 06 Oct 2018 20:30:31 GMT

@jdbkiang wrote:
So I’m understanding that your credit report will still show those accounts, but I won’t have a FICO score? Are they separate?

A FICO score is the result of a computer program taking all the data on the report and turning it into a single 3-digit number (typically between 300 and 850).

A person cannot have a FICO score with nothing on the report, but he can have something on the report and no FICO score. (I gave you two criteria that have to be met before a FICO model will give you a score.)

So during the first six months after the accounts are closed, you will have a FICO score. Then for another 9.5 years you will have no score but will have all those closed accounts on the report. Then after that (assuming that the accounts all fall off at year 10, which is very likely) your reports will have no accounts on them.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Sat, 06 Oct 2018 20:35:47 GMT

I see! Perfect. Thank you for the clear explanation.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

pinkandgrey — Sat, 06 Oct 2018 22:05:50 GMT

The accounts will stay on your report for something like 7-10 years. It would take a LOOOOONG time to get back to a no-credit situation. I can't imagine that it would look good either...

Re: Is it possible to have nothing on your credit report after having loans or CC's?

RobertEG — Sun, 07 Oct 2018 22:19:31 GMT

Also, be aware that once you close an account, the creditor may choose to discontinue any further maintenance of the account by then reporting its voluntary deletion in toto. That removes any need to monitor for possible updates or to investigate any possible disputes filed by a consumer regarding prior reporting on the account.

While the CRAs will delete after the account has been closed for approx 10 years, that does not ensure that the creditor wont decide to delete at any time, and thus remove the account from your report and from scoring.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Sun, 07 Oct 2018 22:41:48 GMT

I see. Thank you all for the very helpful answers!

Re: Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Fri, 12 Oct 2018 18:21:33 GMT

Bonus question!

If I understood correctly, after 6 months of no activity, scores disappear, but everything still stays on the report, right?

So 1. What happens if you have had late payments or other delinquencies before? I assume they still stay on the report, but if you no longer have a score, will lenders be able to see that?

And 2. If after 6 months of no activity and your scores disappear, you get another line of credit, will everything resurface?

Re: Is it possible to have nothing on your credit report after having loans or CC's?

iv — Sat, 13 Oct 2018 22:41:03 GMT

@jdbkiang wrote:

If I understood correctly, after 6 months of no activity, scores disappear, but everything still stays on the report, right?

FICO scores would no longer be calculated on a report that doesn't have activity in the last 6 months, correct.

@jdbkiang wrote:
So 1. What happens if you have had late payments or other delinquencies before? I assume they still stay on the report, but if you no longer have a score, will lenders be able to see that?

The report is still there, yes. Nothing about the report is changed, it's just that without recent activity FICO won't calculate a SCORE. The REPORT itself will still be just as visible to lenders as it was before.

@jdbkiang wrote:
And 2. If after 6 months of no activity and your scores disappear, you get another line of credit, will everything resurface?

Resurface? It never disappears in the first place. But if you have new activity reported, then FICO scores will be calculated again, on the whole report, as normal.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

jdbkiang — Sun, 14 Oct 2018 04:02:49 GMT

@iv wrote:
@jdbkiang wrote:

If I understood correctly, after 6 months of no activity, scores disappear, but everything still stays on the report, right?

FICO scores would no longer be calculated on a report that doesn't have activity in the last 6 months, correct.

@jdbkiang wrote:
So 1. What happens if you have had late payments or other delinquencies before? I assume they still stay on the report, but if you no longer have a score, will lenders be able to see that?
The report is still there, yes. Nothing about the report is changed, it's just that without recent activity FICO won't calculate a SCORE. The REPORT itself will still be just as visible to lenders as it was before.

@jdbkiang wrote:
And 2. If after 6 months of no activity and your scores disappear, you get another line of credit, will everything resurface?
Resurface? It never disappears in the first place. But if you have new activity reported, then FICO scores will be calculated again, on the whole report, as normal.

Thank you so much for the clear breakdown!

The reason behind all these questions is because I have friends who are talking about living with "no credit," and using manual underwriting to attain their mortgages. Does anyone know if manual underwriting will pull your credit anyway? Because if everything is still on the report, even with no score, a poor credit history could still be a problem.

Re: Is it possible to have nothing on your credit report after having loans or CC's?

iv — Sun, 14 Oct 2018 05:31:13 GMT

@jdbkiang wrote:
The reason behind all these questions is because I have friends who are talking about living with "no credit," and using manual underwriting to attain their mortgages. Does anyone know if manual underwriting will pull your credit anyway?

Of course they will! (To quote Fannie Mae: "Note: A borrower may lack sufficient credit to obtain a credit score. However, the lender must still consider any derogatory credit references that appear on the credit report.")

And manual underwriting isn't going to be easier than just getting to a minimum acceptable score for automated approval...

Not only that, they may run into additional restrictions (for instance, Fannie Mae limits DTI to 36% for manual underwriting).

@jdbkiang wrote:
Because if everything is still on the report, even with no score, a poor credit history could still be a problem.

Yes, yes it could.

And certain kinds of negative information will block manual underwriting completely (foreclosure and bankruptcy, for instance), while with a bit of waiting time and credit improvement, automated approval would be just fine even with those on the reports.

Even if your friends were planning on waiting the full 7 (or 10) years for their reports to be actually blank... manual underwriting is still more difficult than just simple score improvement, and provides more flexibility in lending options, as well.

Read the Fannie Mae guidelines for more details:

https://www.fanniemae.com/content/guide/selling/b3/5.4/01.html

https://www.fanniemae.com/content/guide/selling/b3/5.4/02.html

https://www.fanniemae.com/content/guide/selling/b3/5.4/03.html