Bad credit is one of the biggest issues plaguing consumers across the country today, but one issue that can be even worse is the struggle of having no credit at all. Created from the fear of bad credit that is rampant among consumers today, this situation can be just as damaging for today’s consumers, if not even worse.

Just like turning around bad credit can take an enormous amount of work, building new credit from scratch can be a huge undertaking. And at the end of the day, many consumers are able to come back from bad credit even faster than they are able to build up new credit.

Let’s jump right in and take a closer look at how each of these situations works so that you know what to expect wherever you might be in the process of building your credit report into a respectable tool in your arsenal.

The Process of Fixing Bad Credit

Anyone who is struggling with bad credit will likely be doing so because they have a number of outstanding balances owed to various sources like credit card companies, old utility bills, medical bills, and even student loans.

In addition to outstanding balances that are current, bad credit can also involve delinquent accounts, accounts that went into collections, and even past bankruptcies. As a general rule, any of these negatives will stay on your credit report for up to seven years.

The process of fixing bad credit typically starts with resolving any delinquent accounts or accounts in collections, and many lenders will agree to remove these accounts from your credit report in exchange for settling those accounts. Once that is handled, the next step is to pay off the current accounts to bring your credit into line.

The Process of Building New Credit

While fixing bad credit is all about paying off existing credit account, the process of building new credit involves finding ways to open new credit accounts in order to prove that you are responsible enough to maintain them.

In many cases, consumers here start off with a specific store credit card and make small charges that they pay off in full each month. From there, as your credit score rises, you can eventually build up to more serious credit cards and eventually a home or auto loan.

Building credit almost always boils down to making consistent payments on a number of accounts over a long amount of time. And since time is one of the most important factors here, the process can take years to get you where you want to be.

Comparing Credit Situations

The major advantage of working with bad credit is that it is more of a money problem than a timing problem. Therefore, if you have more money than time, you can often fix bad credit more quickly than you can build new credit from scratch.

On the other hand, young people with more time than money will find that not having the debt that comes with bad credit hanging over their heads is a huge advantage in other aspects of their lives.

Whether you are struggling to repair bad credit or build new credit from scratch, there are solutions that can help you get from either place to where you want to be quickly. All you have to do is put a plan in place and follow it with discipline.