Housing Counselor’s Corner: No Credit vs. Bad Credit

A common question we often hear is what it means if one has no credit and does it have the same impact as having bad credit.

First, let’s establish what it means to have no credit. If you have little to no credit history, you could run into issues when attempting to borrow money or rent an apartment. While these are also issues you may experience with bad credit, it is easier to build a credit record than it is to repair one.

If you lack credit history, some of the things you can do to establish it include:

• Paying student loans off in a timely manner
• Taking out an auto installment loan
• Obtaining a secured loan

Bad credit however, is harder to remedy.

Bad credit indicates that you have failed to pay money owed on time, experienced a financial hardship or have a high amount of debt. It is harder to fix a bad credit score than it is to establish credit.

While to some extent you can begin establishing good credit in 3 – 6 months, depending on what your credit history consists of, it could take years to improve bad credit.