Do you want to get a loan, buy something in installments? But if you have poor history, or do not have credit history yet, then you will not be able to get financial support for a fairly large amount. You are probably wondering what is better – no credit or bad credit? Let’s look at this question in details, so that you do not have any doubts about this.
Poor credit or lack of it?
It is worth it to have a good credit. It will help you get financial support when you want to buy something worthwhile, such as a house or a new car. Neither low credit, nor its absence will help you with this, if such a need arises.
Each lender will carefully consider your credit before approving a loan for a more or less large amount. Any of them will not help you get approval for a sufficient amount.
If you have no credit at all
If you do not have a credit history, then lenders will not be able to see and check how you behaved in the past as a borrower and what the risks are, when they give you a loan. Most often, there is no history among young people who have recently reached the age of majority, although this situation is found not only in them. It often happens that some adults do not have a history if they have not previously used loans or cards.
If you do not have a history, even if you show a good income, you cannot expect good conditions from lenders, including acceptable interest rates, because lenders do not know how you behave as a borrower and how risky you are. In this situation, there is also no significant difference that you have no credit or bad credit. When your behavior remains unknown to the lender, the risks for them increase, so the interest rate for you will be higher.
What if you have poor rating?
With a bad loan, lenders immediately see that you are not well enough to manage your finances, including funds. This could have happened as a result of certain mistakes, could be the result of certain circumstances that were not dependent on you, and also it may be as a result of a systematic incorrect attitude to your financial obligations.
In any case, it does not attract lenders to you who are engaged in good loans and offer good low interest rates. If you have poor history, then you have a direct road to lenders who specialize in bad loans and offer conditions that are far from being the most attractive for borrowers.
As they say – there are no hopeless situations. If you have bad business with low rating, then you have the option of finding a friend who has a credit rating not lower than 700 points. Then he will be able to play the role of your guarantor or a cosigner, but finding a person who will be ready to answer for your debts can also be difficult. Most often these are parents for young people or other family members or spouses who are ready to vouch for you.
No credit or bad credit matters to someone who wants to build good score for themselves. You can build your rating from scratch if you did not have one. It will be easier than repairing a previously destroyed one.
When you are just starting your credit history, then you have a great chance to build yourself a great history, which from scratch is much easier than repairing a damaged one.
You can start with secured cards that will not require high interest rates, but at the same time you will need to make some kind of deposit, which will act as collateral. With proper card handling, timely payments and the avoidance of a significant growth in balance, your rating will gradually increase.
There are also various other options for credit cards, where you should generally follow the same rules for handling them in order to build yourself a good history.
Another option to start building your credit rating is to become an authorized user on someone else’s credit card, for example, on one of your parents ’credit cards or other older relatives.
What to do if you have poor credit history
When you find yourself in such an unpleasant situation that your credit has become bad, you need to start, first of all, by examining your report. Once a year, a free report from one of the US credit bureaus is available to you. It is necessary to carefully check your report for errors in it in order to fix them in time, if they have a place to be.
Check all your payments and if you have made any of them, but they are not marked, then you can dispute them. In addition, someone else’s loans can be included in your report, which you can also challenge and insist on being removed from your report.
Contact Finance Specialists
If you have any questions, contact the finance specialists who will help you deal with all these questions and will tell you where to start and how to proceed.
Read our financial blog to be aware of what to do with your personal finances, how to build your history, where you can save, which loans and for which life situations are more suitable for your specific circumstances. Write us, ask questions, and leave your comments below.