No credit history vs Bad credit history

A credit history shows the ability of a customer to repay the debts. It also demonstrates debt repayment responsibility. Credit history is a record of a detailed summary of debts, repayments, detailed lines of credit, bankruptcies if any and contains other personal debt-related information.

Credit history is generated through a track record of debt payments written in a credit report. Once you pay your debt, credit bureaus update your record positively. If you miss your debt payment it’s recorded negatively and with this, a credit score is generated. The credit bureaus maintain all information related to the customer in the credit reports.

What banks look at before issuing a loan?

If your applying for a loan there are two things banks look at, one is no credit history and the other is having a bad credit history. It is easy to deal with no credit history as you start your new credit journey. 

However, it is difficult to deal with a bad credit history. You have to work out to build a good credit history so that you can qualify for loans or to get a credit card in the future. 

What is No Credit History?

No credit history means that you do not have any credit history on your credit report. It clearly states that you have not borrowed money from any lending institutions. 

Those who do not borrow money do not have a credit history. 

It is difficult for lending institutions to deal with applicants with no credit history because they do not have any assurance for repayment of the loan. 

How to Build a Credit History? 

To build your credit history you can take a small loan or a credit card. Remember to make your payments on time each month. 

Try to pay off your loan as early as possible. The reason everyone wants to build a credit history is to make themselves qualify to get a hasslefree loan. 

If you get a loan approved then your responsibility begins and you have to handle it cautiously by making payments on time. If you do not get a loan approved then take the help of a cosigner. 

A cosigner is a person who ensures that you get a loan. Lenders look at the credit history of a cosigner and assign a loan. Cosigner credit score can be hit if you miss a payment. 

Click here to know how to improve the credit score?

What is a Bad Credit history?

If you have delayed monthly debt payments or you are making regular minimum credit card due payments then you may have a bad credit history.

  • Bad credit history is created because of defaulting a loan completely.
  • If you missed a credit payment you are creating a negative activity.
  • A Negative activity will lower your credit score.
  • If you are using your complete available credit limit it creates bad credit
  • If you have borrowed an excess amount that you cannot afford to pay, it can badly affect credit score.
  • Bad credit makes it very difficult to qualify for good interest rate loans. 
  • If you had a bankruptcy your credit score will be very less and this will stay as a remark on your credit report for 7 years.

How to Manage a Bad Credit? 

If you are having bad credit it takes time for you to repair. Everyone wants to improve credit scores and qualify for unsecured loans with low-interest rate loans. 

You need to remember that it takes time to build a credit score. 

If you have any loans outstanding, you should work on them and reduce the amount you owe to the lender. This will help in reducing the debt to credit ratio. 

Once you have reduced the debt to credit ratio, you can work on paying off the debts. This process will slowly bring back your credit score up in a period of time.

Click here to know how a bad credit report affects your life


To sum up, no credit history does not mean bad credit. Both no credit history and bad credit history are not good. If you do not have a credit history start building it. 

If you have a bad credit history manage it with caution so that you have an excellent credit score. The first step to staying in the right direction is to keep yourself informed about your credit score. With a strong credit score, you look more trustworthy and you can increase your chances of loan approval quickly. 

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.



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