In 2006, I bought my first car with a loan. In 2008, facing a number of emergencies, I took out a credit card and maxed it out. I worked hard not to miss a single payment on either and to pay off the car early. I settled both debts in full in 2010, and closed the credit card account, not wanting any temptation to go back into debt. I have had no other borrowing activity. I married in 2014, but have taken care to keep my wife's finances separate from mine.
Since 2010, my credit score had been excellent whenever I checked it once or twice each year, and I was proud of myself for doing what I thought was the right thing. But last week, I was turned down for a rental car on my debit card. I checked my credit score, and was shocked to find that it was 0 with all three agencies! Specifically, I am "unrated."
According to the company that provided me with my credit score, one factor in my score suddenly disappearing might be:
No open installment accounts are reported. Having no experience with a specific type of account is considered negative. Having too few accounts overall is also negative. This is because it does not provide enough information about how you typically use credit and repay your debts.
I live in the United States if it matters. A few questions please:
- I thought that bad events in your credit history disappear after seven years, and good events stay forever. Is that not correct? Why would all of my events disappear after only five years?
- Can I get back my healthy credit score quickly? If I open a new credit card this week and purchase something and pay the bill, will my score then be near zero or near its previous height? I intend to move early next year and was looking forward to having the high credit score.
Can I even get a decent credit card now? If I apply, will I be judged based on my dormant history or be treated as if I have no history at all?
I have heard many times of people keeping a single credit account open, buying one inexpensive item on it per month, and then paying each bill on time. I always thought this tactic was for people trying to repair a damaged credit rating, not to preserve a good one, but apparently I was wrong. Is this what I should have done, and what I should do now?
Thank you for the help!