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The No credit versus bad credit is a highly debated topic with ardent supporters on either side. The truth, however, is that while one may be a marginally more advantageous than the other, both cases are considered deterrents for those who wish to enlist the favors of banks and other financial agencies. The reasons for either case may affect whether or not a bank, for instance, decides to sanction a loan. However, the safest option is to have a credit history and a good credit score.

In the past, banks required their loan applicants to file property papers and other documents to prove their credit worthiness. After the credit history gained popularity, banks and other financial agencies have further simplified their services. A credit history takes the place of a guarantor, and a mortgage of valuable assets (movable and immovable). For instance, the role of the guarantor was to ensure the creditability of the loan applicant.

If the applicant in question failed to may the required payments, the company/ bank will contact the guarantor. The role of mortgage was also similar. With mortgage, the bank will determine the loan amount based on the value of the property being mortgaged. The sale deeds and other related papers will be kept in the bank and returned only have the loan has been cleared. While mortgage still exists, its role as a guardian of credibility is fading, even as credit histories gain importance.

Therefore in the absence of a credit history, what proof does a bank have that the person under consideration is risk free. There is a chance that no credit history is better than a bad credit score, as there is always the benefit of the doubt. Furthermore, the finance agency will delve into the reason why a person does not have a credit history. Most often, students fall into this category. Where students are concerned, banks and such are more generous. The student may be granted a loan or a credit card etc provided he/she can locate a guardian or family member who will serve as co-signer.

As far as bad credit histories are concerned, they are implicative of a record of irregular payments and consistent defaulting. Rarely, if ever can a bad credit score reason its way through. However, a bad credit score can be rescued with time. Even so, no credit history can be considered a better predicament than a bad credit score.