Can your credit score revert to zero?

If you’ve settled your credit-bearing accounts and you decide to close them, would your credit score eventually return to zero? We consider what this course of action would mean for your credit report, by examining the impact your payment history has on your credit score.

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The importance of your payment history

According to Annelene Dippenaar, chief legal and compliance officer at Experian Africa, one of the biggest contributors to your credit score is your payment history.

“Your credit score depends on whether you pay the full required instalment amount, and whether you pay on or before the agreed-upon date. This indicates how well you pay your accounts and it’s indicative of the risk associated with lending to you,” says Dippenaar.

She explains that if you have a credit score of zero, this usually means that there is not sufficient credit history from which to calculate the score. She adds that in the credit industry, those who do not have a sufficient credit history are referred to as “thin files”.  

Will your score return to zero?

Dippenaar says that your credit score will not immediately revert to zero when you close your accounts. This is because the data remains in your credit history for a period of time after your accounts are closed.

“There will still be updates on those accounts, and typically the data will generate a score for about two to three years after your accounts have been closed. The moment there is no data on your profile left, the score will be zero, or your record will be called a ‘thin file’,” says Dippenaar.

She explains that the reason for this is that the scoring model does not have any credit information against which to calculate a score.

“It’s important to note that this is not a negative inference, but merely a neutral indicator that there is no credit information against which to calculate a score,” says Dippenaar.

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