I occasionally get people in my office who want to buy a home, but they have no credit history whatsoever. This leads me to a good question: is it better to have bad credit or no credit?
From the perspective of a lender, it is riskier to lend to someone with no credit history at all than someone with bad credit. They have no way of telling if you are good at making payments or not. When you have bad credit, we can fix it. But if you have no credit at all, there is no way of telling what kind of borrower you might be.
A lot of the time, no credit ends up getting you no mortgage. This is why it’s not a terrible idea to start building credit now. You can buy a credit card and put a very small balance on it, and pay it off month to month to build a little bit of consistent credit history.
It’s surprising to most people, but it is better to have bad credit than no credit at all. If you want to buy a home in the future, I highly suggest that you begin to build credit now.
If you need help buying or selling in Denver, please don’t hesitate to contact me!