For credit qualification purposes, bad credit and no credit are similar. Bad credit means that you have had credit problems in the past, such as missed payments, high debt compared to credit card limits, and accounts that have gone into collections. Based on your behavior, you appear to be a risky borrower. No credit, on the other hand, means you have not used credit products that show up on your credit report. Credit scoring companies have no information to put into their risk scoring models. Therefore credit issuers don't know if you are a good credit risk, which makes you a risky borrower.