How to get a loan with no credit history
You might
think that you have the model application to get a loan – no prior history of
taking a loan, no credit issues with a loan or credit card, no credit cards (
or maybe one at most). In effect, you have a perfect debt-free record.
However,
lenders do not see a credit-free past in the same way. They want a substantial
credit record comprising multiple loans or credit cards over a long time
span to check if you have demonstrated responsible repayment behavior in the
past. They check your past credit history to evaluate if you are at low risk
for defaulting on payments. They cannot do this with a customer who has
absolutely no credit record, or only a very minimal record.
What is the
way out of this situation? How do you build a credit record when no one is
willing to extend credit to you? How do you get a loan with a ‘thin credit file’?
Steps to take if you have no credit
history
Fortunately,
there are a couple of safe and convenient methods that are guaranteed to build
your credit history and help you get a loan, provided you do it the right way.
Take out a series of small-value
loans: Even if you
don’t need these small amounts, a small loan is an invaluable way of building
your record if you have absolutely no credit history. Each loan that you repay
in full and on time will help you build a good credit record. Small loans do
not require an extensive credit history for approval so they are a good way for
people with no prior credit history to create a credit record. It is very
important to make all your repayments on time and in full. Any late or skipped
payment will have a negative effect on your credit score. Ensuring that you
have a perfect repayment record will play a substantial role in turning your
–eligible in quick time.
Apply for a secured credit card: A secured credit card is another way
for people with no prior credit history to become loan-eligible. It works exactly
like a regular credit card, the only difference being that you will need to
make a security deposit with the issuing bank in order to qualify. In case you
do not make your payment, the bank will use your security deposit to recover
your dues.
Every time
you make your monthly payment to clear your credit card bill, the bank reports
it to the credit bureaus. Each payment you make will have an immediate positive
impact on your score and help build a healthy credit profile.
If you have
a problem with securing a loan because of a lack of prior credit history, you
can approach a reputed credit management company, like CreditMantri, to help
build your credit record in the quickest and most optimum way.
