No Credit vs. Bad Credit: Both Just As Bad?

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karna68
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No Credit vs. Bad Credit: Both Just As Bad?

Postby karna68 » Sun Sep 11, 2011 7:25 pm

My mother has her house paid off, is in her 70's, and thinks she has good credit even though is not using any. I said for that to happen she would have to be using at least a gas card or some other credit card. Which one of us is right?


JNK
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Postby JNK » Thu Sep 15, 2011 4:33 am

According to a Fair Issacs rep in an article/interview I read... I forget exactly where (probably from the FICO website):

If your mother has used credit cards in the past and has built credit in the past, it is entirely likely that those older lines of credit - along with her probably-very-old-mortgage-that-is-paid-off - are still showing/will still show as positive factors in her credit report.

My own father is 60something and he for sure still has 'good credit' points from his first mortgage (first house) being all paid off and on time from way-back-when.

That said: No credit is 'better' than bad credit because at least with NO credit, you have a blank/clean slate. With BAD credit, you have a bad credit history behind you which your score is the consequence of and that bad credit history stays with you for a while.

One person may have a 0 for their score, but that's because they don't have anything at all to score them with.

A second person may have a 450 for their score, which is 450 more than a 0, but their Poor Credit is because they messed up their credit history.
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naomibatac
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Postby naomibatac » Sun Sep 18, 2011 9:32 pm

No credit and bad credit are both bad if you are applying for a loan, credit card or any mortgage. Why? Because, if you have no credit, you don't have any credit history or credit score to evaluate your application; if you have a bad credit, it will have a negative effect on your credit record and may cause disapproval of your credit card or loan application.
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Mogul of Pineapples
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Postby Mogul of Pineapples » Thu Oct 06, 2011 1:52 am

That said: No credit is 'better' than bad credit because at least with NO credit, you have a blank/clean slate. With BAD credit, you have a bad credit history behind you which your score is the consequence of and that bad credit history stays with you for a while.


Exactly. Banks tend to view a clean slate more favorably, especially if you are a young adult.
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