I'm sitting in this really boring personal finance college class, working an online Sudoku puzzle, and the instructor suddenly grabbed my attention by saying it's often better to have a BAD credit history than NO credit history at all! This guy is a former bank lending officer, so I wonder if there's something to what he said.
I screwed up a car loan a couple of years ago, and figured I wouldn't be able to get any more credit for a while. Does this mean I might be able to get another loan without any hassles?
There is always a way to get credit, whether your credit history is good, bad, or non-existent, but as a rule people with a good credit history get more credit more easily, and at a lower cost; people with bad credit history are limited in where they can obtain credit, and pay more for it when they get it; and people with no credit history may find it's necessary to start "small" with student loans or store credit accounts or other credit cards, before they are able to obtain more significant loans such as a home mortgage or a new car loan.
Your past negative credit experience will be included on your credit report for several years. While it's there, it's likely that you'll have to pay more for credit, or find it more difficult to obtain. You may have to start small and manage your new credit well before you'll be accepted for more substantial loans.
Try to avoid borrowing from high-cost lenders such as those that specialize in "pay day" loans and check cashing, and always shop around for better deals before committing to one just because it's available. Finally, think about the fact that the instructor you were listening to is a "former" bank lender. There may be a reason he's no longer in that business.
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There is always a way to get credit, whether your credit history is good, bad, or non-existent, but as a rule people with a good credit history get more credit more easily, and at a lower cost; people with bad credit history are limited in where they can obtain credit, and pay more for it when they get it; and people with no credit history may find it's necessary to start "small" with student loans or store credit accounts or other credit cards, before they are able to obtain more significant loans such as a home mortgage or a new car loan.