No Credit Equals Bad Credit

By Leni Parrish on October 16, 2009

Perhaps the most ideal lifestyle one can wish for is having no credit. This means that one is free of any kinds of loans, be it a car loan, housing loan and many others. This follows that the person does not own a credit card since he would always prefer pay in cash his purchases. However, do you know that having no credit is tantamount to having bad credit? There are two reasons why a lender is hesitant to do business with someone.

The first reason is that a person has a bad credit history. The lender feels that if he does business with somebody who has a bad record, he will risk not being paid on time or even not being paid at all. The second reason, as stated above, is the absence of credit history basically because there is no credit record to look at in evaluating the person’s disposition towards paying off debts. At this point, we might have come to a realization that credit history is important and that you have to make it good ratings to avail of loans offered by different financial institutions. Even the richest man on earth has credit. It is unwise to spend all your financial resources on one expensive item when the item can be bought by credit according to financial management experts. They would always say and I am certain that you have heard   this – “Do not put all your eggs in one basket.” This actually implies that you have to avail of credit.

Channeling your financial resources even if it entails credit to other items is healthy and therefore advisable. This can greatly improve the quality of your life. Of course, as a result, you incidentally create credit. This is actually putting you in the center stage for you to be able to prove your worth as a debtor. Your only obligation is to make your credit good. Once you create a good reputation, lenders will run after you, placing you in a very good position to accept or reject offers. It would be really nice to have many options opened in front of you so you can choose the best offer there is.

When you have no credit yet, it seems difficult to obtain one because of a lack in history. While it is true, it is not impossible to open credit with lending companies. It is suggested that you should have a bank account. It will be best if the bank account is old enough to establish credence for itself. If you do not have a bank account yet, you have to open one now with the bank of your choice.

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