Bad Credit vs. no Credit: Which one is worse?

It’s not just high demand or steep monthly payments that could come between you and a loan at the bank, a credit card you would like to apply to or an apartment that you would like to rent. There’s another big obstacle: your credit score. If you have bad credit or no credit at all you are already at an unfavorable position in relation to other applicants. But who has a harder time: people with bad credit or those with no credit?

First the difference between them: having bad credit is the result of a poor credit history while no credit points out to a lack of credit history. Now defining which one is better is quite complicated. Let`s say, if you were a creditor, would you rather take a chance on someone with no existent credit history or give a second chance to a person who had failed with his or her bills in the past?

Choosing between a person with no credit and one with bad credit is like gambling because the first person is unknown as a payer, there is no record of money management at all and on the other hand, the other one has a record of poor money management. Some creditors are more likely to approve someone that is willing to build credit while others may opt for a debtor with some sort of record, even if it`s a bad one.

The bottom line is: neither situation is ideal, in a real world a creditor would much rather choose someone with good credit over someone with bad or no credit at all. But in general, having bad credit is almost always worse than having no credit, having to choose between those two, in most cases, a creditor would choose the one with no credit. It`s easier to build credit than it is to repair bad credit.

If you have bad credit or no credit, there are still some ways you can compete with more-qualified applicants, for example by explaining your situation. Review your credit before you meet with a potential creditor. This will allow you to catch any errors and prepare to explain why your credit is the way it is and what work you are doing in the way of fixing it.

In any case, the key to better credit over time is paying all your bills on time and in full. Your credit score is a key factor in determining the approval of an apartment you`d like to rent or either a loan you`d like to take at the bank. An effective credit repair requires taking appropriate action and so does it to build a good credit from a clean slate and Baby Boomers can help you with that. Send us a message or call us today at +1(833)700-6835   and talk to one of our specialists.