No Debt, More Problems
You have to love the feeling of being debt-free. No more dreading looking at your monthly payment installments as they drain your bank account. No more wondering when you’ll see the end of the debt train. Or, maybe you're the opposite? Maybe you've managed to make it through life thus far without incurring one penny of debt. Congratulations! You can invite us all out on your yacht because you obviously have enough cash to make it rain.
If you fall into the latter category, you may think that avoiding credit is better than a dinged-up credit score. But if you ever face the decision to finance a major purchase, such as a car, having no credit at all is going to majorly impact your chances. Not to mention, no credit history can negatively affect your chances of signing a new lease on an apartment, setting up utilities, and filling out a loan application.
Because when you have no credit, you have no leg to stand on. There is nothing for lenders to look at in terms of how you’ve established yourself in your credit history. A bank or lender has nothing to evaluate you on when trying to decide if you are likely to pay back your potential car loan on time, or even at all. You’re more than just a “risk” – you’re a big ol’ question mark for them. Since most lenders don’t like playing guessing games (like the majority of society, not surprisingly), they’re more like to decline your loan application.
This is why, even if you have bad credit, you are more likely to get approved than, say, someone who has no credit, since you have something they can work with. Though you’re still a risky borrower, you can still receive approval, even if they aren’t on the terms you had hoped for.
The good news? You can build your credit no matter what point you’re at in your life. Start by opening up a credit card at your bank – lenders typically like to see that you’ve different types of credit (revolving and installments) in your history. A credit card is a great first, baby step into the credit pool. Make sure you use your credit card consistently and responsibly, always paying off your purchases on time and in full. It may take some time to build up that credit, but it’s going to pay off (pun intended) in the long run, which means you have more chances of getting approved for that dream car through BC Drive!