Two financial imbroglios can make your life difficult as an individual; absence of a credit history or bad credit record. No need to remind you that applying for a loan will meet a dead end, no one will be willing to lease an apartment to you and no company will ever want to have you on their payroll. These situations will put you at the mercy of a consigner, who may also be scared of taking you on since you are a liability.
What is Zero Credit History
On your credit report, there will be nothing to report if you have never borrowed or applied for credit. The absence of a credit history denotes that in the last 7 years, you have not borrowed money or applied for a credit facility. This scenario is not as difficult as it appears, if you are still in college or do not believe in credit, then you may not have a credit history.
However, it becomes escalated when you need an apartment or a new job and you can’t find one. Most employers are wary of employing individuals without a history of credit, they are not sure if you are always in time with your payments or a serial defaulter. Your credit history is your proof of your financial status, everyone is expected to have one.
Starting Out Fresh With Credit
This isn’t rocket science, just walk into any credit institution and apply for a credit card or a car loan. You are about to start building a credit history, every financial decision made will reflect in your history onward. These decisions will either push you’re into bad credit or be in a good credit rating.
You may need a cosigner for your first loan, ensure you are responsible for your repayment. Any negative action will jeopardize the ability of the guarantor to access credit as it will hamper their credit score. Make prompt payments monthly and avoid poor decisions.
What Bad Credit Means
Poor decisions lead you to a bad credit situation. Every late payment you make, loans you have completely defaulted on, or when your utility payment leads to discontinuation of service. The worst can be when all these debts have been turned to a collection agency for retrieval.
Your credit score will be negatively affected by all these financial embarrassments. Many credit card user does not know their credit limit, over borrowing on your credit will also send your credit score to the rock bottom.
Any negative mark on your credit report may never leave for at least 7 years. Except you employ the services of a professional credit repair firm to help put you back on track.
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