How does the low creditworthiness of no credit history differ? Key questions answered | Mint

If you have never borrowed money in the past, chances are you have no credit history. It differs completely from a poor creditworthiness. A scenario without creditworthiness usually happens if someone has never made a loan, or has used a credit card, it is not uncommon for some people to have no credit history. This usually happens to the students and young professionals who do not have a history of using a credit card. Here, the main differences between low credit and no creditworthiness are defined. A ‘gene credit history’ usually happens if someone has never made a loan, used a credit card or was busy with a credit activity. This means that there is no financial history for borrowers to evaluate. How does it differ from a poor credit rating? This is not uncommon among young people who just start their financial careers. In contrast, a low credit rating refers to the person who used credit, but could not manage it well. For example, they may have missed some of their credit card payments, failed on loans or even used too much of their credit limit. What is an unknown risk to a bank? From the point of view of a bank, someone with no creditworthiness is considered an ‘unknown risk’. They simply do not have enough information to judge whether the person is financially responsible. On the other hand, someone with low creditworthiness is a ‘known risk’ because their credit report shows negative patterns. What is the score range for lenders with low credit rating? Often, if you have no credit history, the credit report may apply “no history” or “do not apply”. This means that you have not borrowed yet. If you have a low score, it will be somewhere in the area of ​​300 to 600. Since one would expect banks to find it easier to work with someone who has no credit history instead of someone with bad credit. This is because there is uncertainty with no history, there is at least no evidence of risky behavior. What is better: no credit history or low credit rating? It is better to have no credit history instead of low creditworthiness. As indicated above, borrowers are more comfortable borrowing borrowers who have no credit history. Disclaimer: Mint has a fusion with fintechs to provide credit, you must share your information if you apply. These bonds do not affect our editorial content. This article only intends to educate and distribute awareness about credit needs such as loans, credit cards and creditworthiness. Mint does not promote or encourage credit as it has a set of risks such as high interest rates, hidden costs, etc. The control of your creditworthiness is absolutely first published: 28 Apr 2025, 08:26 pm ist