No Credit Or Bad Credit: What’s Worse?


If you don’t have credit, that means creditors don’t have a good way to predict the likelihood of you paying your bills as agreed.

It is not the same as bad credit, which means you have a history of credit with major defaults.

Even if you have a reliable income but don’t have a credit history, you will be considered a risk because you don’t have a credit history yet. And a lack of credit can lead to:

A – often defined as a score below 630 on a scale of 300 to 850 – makes lenders reluctant to extend credit because you’ve made major credit mistakes in the past.

If you have no credit or bad credit, it’s a good idea to focus on improving it. The way you will proceed is different for each situation.

If you don’t have a credit score, the good news is you’re starting out with a clean slate. Your best options to start building towards a are:

If you have bad credit, you have a different problem with a similar solution.

Instead of trying to create credit, you are trying to .

Unlike people with no credit, you have a credit report and you would be wise to know what it says. Here’s what to do:

Most credit missteps disappear from your credit report in about seven years. In the meantime, you can use some of the credit building strategies, especially credit loans or secured credit cards, to help you recover. Recent, positive payment information can help make up for mistakes in your past.


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