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No Credit vs. Poor Credit Which is more harmful?
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No Credit vs. Bad Credit: Which is Worse?
If you don’t have credit, it means that you don’t have credit record. Credit that is not good means that you have and probably made errors.
By Lindsay Konsko
, Bev O’Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O’Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She holds a bachelor’s level degree of journalism at Auburn University and a master’s in education from Georgia State University. Before coming to NerdWallet she was employed by the daily papers, MSN Money and Credit.com. Her work has appeared in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and other publications. Twitter: @BeverlyOShea.and Lauren Schwahn Lead Writer | Personal finances, debt Lauren Schwahn is a writer at NerdWallet who writes about budgeting, debt, and strategies for saving money. She is a contributor to the “Millennial Money” column for The Associated Press. Her work has also been highlighted on USA Today, MarketWatch and many more. Lauren has a bachelor’s level degree in historical studies from The University of California, Santa Cruz. She is based in San Francisco.
Feb 2nd 2023
Editor: Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. In the past, she worked for 18 years at The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Previous experience included copy editing and news for various Southern California newspapers, including the Los Angeles Times. She received a bachelor’s degree in journalism and mass communications from The University of Iowa.
The majority or all of the products featured here are provided by our partners who pay us. This affects the products we feature as well as the place and way the product is featured on the page. However, this doesn’t influence our evaluations. Our opinions are entirely our own. Here’s a list and .
If you don’t have credit, that means that creditors don’t have a reliable way to predict how likely you will pay your bills as agreed.
It’s not the same thing as bad credit, meaning you have a credit history with major blemishes.
Credit without a limit vs. bad credit How do you tell the differences?
Even if you have an income that is reliable, but have no credit history, you could be seen as a something of a risk due to the fact that you don’t have any history of. A lack of credit can lead to:
Trouble finding a location to live in.
Having to pay higher charges for utility deposits.
Fewer options in case of emergencies.
Higher interest rates (or getting turned down) should you decide to obtain a loan.A — which is often described as a score below 630 on a scale of 300-850 can make lenders hesitate to provide credit due to the fact you’ve made some major mistakes with credit in the past.
Possible examples are:
Late payment.
Utilizing more than 30% in your limit.
Letting an account go to collections.
A past bankruptcy.If you don’t have credit or bad credit, it’s a good idea to concentrate on making it better. What you do to improve your credit is different for each situation.
Find out how your credit is scored
See your free score and the factors that influence it, as well as tips on how to continue building.Five ways to convert no credit into credit worth having
If you have no rating on your credit, then the good news is you’re starting with an entirely new start. The best ways to begin building toward a are:
. These cards, as their name suggests, are backed by a security deposit.
. They are fairly simple to get if you have no credit.
can also help you establish credit, and don’t require upfront cash like secured cards do.
Authorized user status. Being an authorized user on someone else’s credit card with an outstanding payment history could help put you on the map of credit. It is not your responsibility to make payments, though, and it’s effect is only temporary.
The co-signer must be a person who is. This is dangerous for the co-signer since they are entirely responsible for repaying the loan. Failure to pay on your part can hurt the credit score of your co-signer and could damage your relationship.If you’re starting out with no credit, you are not the best choice.
If you’ve got bad credit and you are in a bad financial position, you face a distinct issue with the same solution.
Instead of trying to establish credit instead, you are trying to .
As opposed to those who have no credit, you’ll have a credit report, and it’s a good idea to learn what it says. This is what you should do:
to get a free report from the three major credit reporting agencies. You’re currently entitled to one per week from each through the year 2023’s end.
Review your report for errors, particularly for addresses where you’ve never resided, accounts that you don’t recognize or payment amounts that look to be off.
You are able to; however, you need to complete it to each of the credit agencies, however it’s worth the effort and time. False information can seriously damage your credit score.Most mistakes with credit disappear from your credit report within seven years. In the meantime, you could use some of the strategies to build credit, including credit-builder loans as well as secured credit cards, to help re-establish yourself. Recent, positive financial information will help you overcome mistakes from your previous.
Authors’ Bios Lindsay Konsko is a former staff writer for consumer credit and credit cards for NerdWallet.
Bev O’Shea was an ex-credit writer at NerdWallet. Her work has appeared on the New York Times, Washington Post, MarketWatch and elsewhere.
Lauren Schwahn covers consumer credit and debt at NerdWallet. Her work has been featured on USA Today and The Associated Press.
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