What’s Scarier Than Bad Credit? No Credit!

Many may pride themselves on having zero debt, but is it really the best for their financial future? Not as much as you may think. Being “credit invisible,” or having little to no credit, can make large purchases and future milestones way more challenging to achieve. It's best to think of your credit score as an adult report card. It is a way for lenders to predict how likely you are to pay your loan back. While bad credit means you have a credit history with some significant blemishes, no credit means you don’t have a record at all – which can often be just as bad.

Even with a reliable income, with no credit history, you will be seen as a risk because you don’t have a track record a lender can refer to. A lack of credit can result in:

• Paying higher utility deposits
• Higher interest rates on loans
• Trouble renting an apartment or purchasing a home​​

4 healthy credit habits

The good news is, having no credit tends to be easier to correct than having bad credit. You get to begin with a clean slate! Here are a few ways you can start building your credit history:

• Apply for a secured credit card
• Keep your purchases small and always pay your bill on time
• Accumulate a consistent payment history

Staying off the credit radar may seem like the safest option, but it’s not always in your best interest. Your credit report reflects your ability to manage money, and more importantly if you can pay back any that has been loaned to you. In a lot of cases, credit isn’t an option – it’s a necessity for some major milestones, like buying a car or a home.