Living Without A Credit Score is Possible – But Is It Wise?

In today’s society, credit score is very important to sustain the credit system. Many think that there is no way to live without a credit card. There are many customers who are credit invisible meaning that they have no credit history either they have a very little credit score or no recent credit activity. 

It is difficult to survive in this credit-driven economy to live without a credit score. It is not impossible to live without a credit score. Many salaried employees, business owners and self-employed individuals earn and live without credit usage. How do they manage without a credit card? It is surprising to know these possibilities. 

How to Spend Without a Credit Card?

Below are ways in which you can live without a credit card in the increasing world of credit management. 

Cash Payments

Using cash or debit cards to pay for your daily lifestyle and living expenses. These expenses include entertainment expenses, groceries, food expenses and others. It is risky to keep cash and manage your expenses with cash. On the other hand, if you have the cash you can make a budget and just follow it. If you have a credit card you spend more money than you actually want. Since you are not physically paying out cash you tend to spend more. 

Auto debits on Bill Payments

Your monthly bill payments such as water bills, electricity bills, cell phone recharges, gym membership fees and other expenses come every month. Irrespective of any reason you cannot skip or avoid these charges. You can pay these expenses without a credit card by setting up an auto-debit facility with your bank. You can also pay them through a debit card or in person for these expenses. 

Prepaid Cards

Instead of paying through a debit card, you can use prepaid cards. A prepaid card is a facility where you load an amount of money to your card and swipe this card or use it for online payment. After the balance is paid out fully on the card the card cannot be used. When you use a prepaid card you have control over your expenses to the extent of the amount you load into the card. 

You can use the auto-debit facilities like cash, debit cards and prepaid cards when you make your payments. If you do not have a credit card you cannot postpone the payments. You should limit yourself only to the amount that you have in your account. A credit card user has a credit score which is built by the credit bureau. The data is collected by the team and the record track is prepared by the authorities for the customer. If there is no credit score then a new credit card or loan cannot be issued to the customer. 

Click here for Credit card utilisation impact on credit score

Living without a Credit Score

If a customer has no credit score it does not mean that there is a negative credit score or low credit score. It does not always mean that the customer has no credit history. A customer credit score may not have been initiated to generate with the credit bureau. One account has to be opened and operated for at least 6 months. The bank or the financial institution should report the data to the credit bureau for credit score. The credit bureau will maintain a credit score for the customer. A customer may have a credit history but not credit score because the customer may pay off their debts and close their account. 

Below are few instances where not having a credit score may be a challenge. 

Paying rent 

If you are living in a rental property then paying monthly rent may become a challenge as it is a fixed expense for you monthly. If you have any other emergencies then you cannot postpone your rent payment. If you have a credit card then you can pay your rent for the month and postpone the actual payment to the next month. 


If you are applying for a job in a financial institution or banks they will check the credit score of the applicants. Under Pre-employment background checks companies are including checking credit score. The reason is having a good credit score will ensure good money management skills and responsibility. This method has recently been introduced to the job application process to understand more about the future employee. Note that if a customer does not have a credit score, it will not have any effect on the hiring process nor the hiring decision. 

Car Insurance

Insurance companies do check the credit history of the applicant during the underwriting process. They use specific techniques from the credit score to find out the information about the car insurance holder. Car insurance providers compare the claim history and the credit score to arrive at creditworthiness about the policy holder. 

Applying for loan/credit card

When you are applying for a loan or a credit card then the card issuer or the loan issuing bank will look into the credit score. They will check the credit score and evaluate the credit worthiness of the applicant. Basically the lending institutions check credit scores because they want to focus more on the repayment capacity of the borrowers. 

Click here to know What is a pre-approved Loan?

Is it wise to live without credit score

If you have a credit card or loan you will get sufficient time to repay your debt. When you repay debt on time you will build a good credit score. If you have a good credit score then you will be eligible to get additional credit limit on credit card or additional loans facility. You will have the benefit of enjoying the privileges of fast approval and processing of loans when you have a good credit score. 

If you do not have a credit score you will not get quick loans or credit cards. This does not mean that you will not be eligible for getting credit cards or loans but there are many other formalities and processes involved for new customers without a credit score. 

In today’s modern lifestyle living with a good credit score is wise because it has an impact on every financial decision that you take. A good credit score will not only help you get loans but it also provides you with a good profile. It is a way of building a smart profile with the credit score that helps you in overall financial decision making from quick approvals to disbursals. 

Complications of Living Without Credit

  • Paying everything in the form of cash or from your available bank balance will be difficult.
  • You have to save and spend for everything in your life
  • Paying rent and travel becomes difficult
  • The chances of earning rewards and benefits is very minimal
  • You cannot afford to pay for big ticket purchases as cash payments or debit card payments do not have facility of converting into easy monthly instalment payments
  • Managing emergency expenses will be difficult
  • Your purchases are limited to the extent of money that you have in your bank account and hence sometimes you may have to compromise on your purchases.

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.



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