Bad credit and no credit: What’s the difference

A bad credit score ranges below 630 on a scale of 300-850. A good credit score proves your eligibility for getting loans from banks. No credit means you don’t have a history of taking money on credit, and hence creditors will find it hard to help you.

bad and no credit
Both bad credit and no credit have their disadvantages. It is best to have a favorable score and take actions that create a good credit history.

In this article

Having good credit is essential to gaining the trust of your debtors and to fulfill your payments and debt. A good credit score proves your eligibility for getting loans from banks. Whether it is good or bad, your credit matters when you want to opt for any debt while, no credit means you don’t have a history of taking money on credit. Hence, creditors will find it hard to know if you are regular with your payments or not. That is not equal to bad credit because you simply do not have a history in this case.

Difference between bad credit and no credit

When you have a good income but no score history, you might be deemed a risk, and it can pose problems in your life.

  • Less emergency options.
  • You will face hurdles in finding an abode.
  • Higher utility payments.
  • High-interest rates and problems in getting a loan approved or opening an account.

A bad score ranges below 630 on a scale of 300-850. A low score inflicts on your bad decisions and mistakes that make creditors reluctant to lend any more amount to you. Here is how you butcher a good score:

  • Utilizing more than 30%.
  • Paying late. 
  • Previous bankruptcy.
  • Pushing any account to collections.

Both bad and no credit have their disadvantages. It is best to have a favorable score and take actions that create a good credit history.

Acquire good score in simple steps

No score means you have a clean slate to create a good score for financial opportunities. Here are some steps that you can take to start with a good record.

  • Get credit builder loans that do not need any money in advance and help you build a good score.
  • Secured credit cards are safer options because of being backed by a security deposit.
  • Go for a student or college credit card which is easy to acquire and leads to a good score.
  • You can get a co-signer, but it is a risky path as the person is responsible for your loan payments, and they will have to pay your loan if you fail to oblige. This puts their score and relationship with you on the line.
  • You can become an authorized user of someone’s credit card and build your score slowly. It will not burden you with too many obligations.

Mend your bad score

Your motive here is to rebuild your bad score and shift to the good side of lenders once again. People with no score do not have a history, but you do, and it probably has some bad decisions that you made. Here is how you can mend it:

  • The first step is to go online and acquire a report from the 3 major agencies. This copy is free, and you can get one copy per month from each place.
  • Assess your report for any errors and mistakes regarding amounts, names, or addresses. Report a payment or transaction if it seems faulty.
  • You can also go online and report eros to the agency. However, this is not a prudent method and can consume a lot of time. Additionally, wrong information hardly has any effect on your score.

Missteps are removed from your report in the time of 7 years. Meanwhile, you can follow this advice to cushion the effect of your bad score and start building your score again. To establish yourself again through secured credit card and score builder loans, or using the other strategies.

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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