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Credit Score News, Tips & Advice « Credit Scores > Credit Score Advice > No Credit Means Bad Credit in the Eyes of Lenders

No Credit Means Bad Credit in the Eyes of Lenders

By Brian Anderson
Published: Saturday, November 28th, 2009

While not taking debt and paying for everything with cash could be a good practice, no credit could mean bad credit in the eyes of lenders. A person’s ability to pay his debt is one vital factor which potential creditors, mortgagors and even employers consider. If an individual doesn’t take the risks of acquiring a credit, he or she either pays everything with cash or he/she doesn’t have enough cash to pat for anything at all. 

Having a credit score is one vital step to establish a good credit history. For individuals who want to start and for those who want to improve, a credit score advice is necessary. 

Although there are several scoring methods, most lenders use the FICO method from Fair Isaac Corporation. Credit score range from 350-850. The lower the person’s score, the higher the bill paying risk. 

A lot of credit reporting agencies and credit monitoring services provide credit score advice.         There could be slight differences in the computation since they derive their computations from a number of different sources. Some credit score advice could be misleading though, so be extra cautious in choosing those which are highly recommended and widely used by a majority of users. 

Under the FICO credit scoring system, credit ratings are assigned to twelve scorecards. One of the categories is where people very thin files or those with only one credit account are put. 

Scorecards essentially allow the FICO formula to give different weight to the same information and credit scoring more fair. An individual has to start out in the bottom of the scorecard group and work his or her way up. 

In order to provide a fair credit score advice for each category, they base it on an individuals payment history, outstanding debt, length if time he had credit, number of inquiries on the report and types of credit, he or she currently have. 

While its worry free to have no credit to think about, there could be instances when we have to depend on credit for some important things in life-whether its for buying a computer, car house, or even getting a student loan. 

Credit score changes as credit report changes. It takes time to build a good credit history. This simple three digit number-your credit score-can determine whether you can buy a house or car. 

The three major credit bureaus (Experian, Equifax, and TransUnion) as well as the credit risk department of lending institutions can provide you a credit score advice. They are the ones who assess the financial health of customers before a credit is extended accordingly. 

No credit means bad credit in the eyes of lenders. One or two credits produce a credit report for you. In the long run, a credit history may prove beneficial. If you are to build a credit history, you need to know how your credit report works. It contains a history of how you’ve paid your bills, how long you had credit and anything else that will affect your creditworthiness. Your credit report advice boils down to a three digit number; your credit score. Demonstrate prudence in the way you handle your credit and your score shall rise.

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