When you apply for a loan, the first thing a lender looks at is your credit score. This three-digit number establishes your creditworthiness and simplifies the loan application process. This score is determined by your credit history such as payment habits, existing debts, and other factors.
But what if you have no previous credit history? Is it possible to get a loan without having a credit background? The answer is yes. Even though a person’s credit history is taken into account while approving a loan, there are financial institutions that give loans to individuals with no credit record. It might be difficult, but with the appropriate procedures, you can simply acquire it.
Let’s go through the factors that will assist you with the same.
Things You Can Do if You Need a Loan but Have No Credit History
Here are the steps to follow.
Take Loan Against Securities or Assets
If you are looking for a Personal Loan, you may face difficulties as it is unsecured in nature and available for a person having a high credit score. However, you can apply for it against collateral. The asset will serve as security for your ability to repay the loan on time.
Apply for a Low Amount
When you have no credit history, seeking a large loan might be problematic and result in rejection since the lender will be suspicious of your creditworthiness. Apply for a low-value mortgage to prevent complications and rejection.
Apply for a Credit Card
Credit cards can also assist in obtaining loans. If you use your card responsibly which means paying bills on time, clearing outstanding debts, and spending within the limit, it will aid in building a good credit report that will make it easier to obtain a loan.
Look for a Co-Applicant With Credit Score
If a person having a good credit score will become your co-applicant while applying for a loan, it will compensate for your lack of credit history. As a result, you will be able to get a loan easily. One thing to keep in mind while applying with a co-applicant, if you fail to repay the loan EMIs timely, your partner’s credit score will be severely affected.
Any loan was previously only offered to a borrower after a comprehensive evaluation of their credit score by the lender. This was done in order to properly analyze the risk of non-repayment connected with a given borrower. However, because many lenders now provide this service, securing a loan without a credit history is now possible.
Moreover, your income is a significant consideration when applying for a loan. You will easily qualify for a loan if you have a stable source of income and fulfill the lender’s loan eligibility conditions.
- Who can become my guarantor while applying for a loan?
Any person having a good credit score can become your guarantor.
- Is it obligatory to apply with a co-applicant for a loan?
No, you can apply without a co-applicant.
- Can I apply for a Personal Loan without a credit history?
Yes, you may apply for a Personal Loan against any collateral if you don’t have a credit history.
- Can a credit card help in building the credit score?
If you use your card responsibly which means paying bills on time, clearing outstanding debts, and utilizing the card within the limit, it will aid in building a good credit score that will make it easier to obtain a loan.
- Is it feasible to get a high-value loan without a credit history?
When you have no credit history, obtaining a significant loan can be difficult and may result in rejection since the lender will be skeptical of your creditworthiness.