Is It Bad to Have No Credit?
If you’re shopping for a new car in the St. Louis area, you probably know that your credit score plays a big role in the auto loan process. And while everyone knows that good credit is preferable, what about no credit history vs. bad credit? Bad credit can be a problem, but no credit can create even more uncertainty with lenders. The good news is that you can improve your standing with the right steps, so you can get on the road to buying a new car you truly want.
No Credit History vs. Bad Credit vs. Good Credit
Is having no credit better than having bad credit? Let’s go into the basics:
- Good Credit: Those with good credit have an established history of paying off mortgage payments, credit card bills, and other fees.
- Bad Credit: Those with bad credit were able to secure financing in the first place, but unable to pay off debts promptly, leading to unfavorable status with lenders.
- No Credit: Those with no credit have never successfully secured financing and therefore, never achieved a record of successful repayments, which can make lenders hesitate to approve loans.
How to Establish Credit
Even if you have no credit history at all, there’s no need to fear. Establishing a credit history is easier than you think:
- Get a Card: Apply for secured credit card at a bank or even a store card and use it responsibly. These cards are easier to get than a standard credit card, but they can build your credit just the same.
- Get a Cosigner: If you have a close relative who is willing to help, you can either ask to become an authorized user on their credit card or ask them to cosign a loan. This will give you a leg up when building your credit.
- Build Good Habits: Once you’ve secured a form of credit, maintain good habits to build your credit score slowly over time; make payments on time, don’t use too much credit at once, and don’t sign up for too many cards.
Learn More About No Credit Financing from Green Light Auto Credit!
So, is no credit bad? Not necessarily. If you’re looking for personalized advice to help build your credit, Green Light Auto Credit is here to help. We offer bad and no credit financing in the Herculaneum and Florissant areas, so contact us with any questions.