Is It Better to Have Bad Credit or No Credit?

Is It Better to Have Bad Credit or No Credit?

November 14, 2019         Written By John H. Oldshue

Something is better than nothing, except when it comes to credit. In most credit-related situations, having no credit may be better than having bad credit.

A recent study from ScoreSense revealed that 53% of Americans have been turned down for a credit card or loan application due to poor credit.

Bad credit indicates that someone has been trusted with a line of credit in the past, and did not manage it properly. This could have been due to delinquent payment histories, defaults/repossessions, or any number of factors. Lenders look at bad credit as a high risk, no matter what the circumstances may have been.

An applicant with no credit has not yet been evaluated. Lenders may be more likely to give this person a chance because there is still a low-risk possibility. With bad credit, all the evidence points to a high-risk relationship.

Earlier this year, Discover found that 82% of Americans check their credit score at least once a year, and 56% of adults are actively working on improving their credit scores. A report from LendingTree showed that a person with fair credit could spend $5,629 more on credit card interest than someone with ‘very good’ credit. Having a good credit score could save thousands of dollars in loan and credit card interest, depending on how much you borrow.

Ultimately, the best scenario is to have good or excellent credit. If you’re trying to build credit, you may start with a secured credit card or low-limit credit card. Make your payments on time and keep a low outstanding balance each month. If you have bad credit, work on repaying old debts to increase your score with time. These steps will pave the way for better lending opportunities in the future.

The information contained within this article was accurate as of November 14, 2019. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for
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