How Will No Credit or Bad Credit Affect Your Home Purchase?

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Today we'll discuss no credit versus bad credit-- is one better than the other?

When you have no credit, you might have all the intentions to pay on time, but you are a big question mark for the lenders because they have no way to verify your spending habits. The banks will be hesitant to loan you money if you have no credit history. You need to show you can handle debt by paying it off. Don't get into heavy debt, but have some kind of credit card or car payments lined up to build credit history.

If you have bad credit, that is usually better than no credit. Bad credit shows patterns of spending and debt that the banks may be able to live with. Maybe you had a medical emergency that led to your bad credit. If you lost your job during a particular time and bills fell behind, but got a new job and paid payments back, the bank will see that as well. The bank may decide to give you a home loan, but you may have to pay higher interest rates than someone with good credit.

The bottom line is that bad credit is better than no credit. If you have any questions for me, please do not hesitate to give me a call or send me an email. I look forward to hearing from you!