How to Get a Loan
Every financial situation is different. Some people may seem to have readily built their credit, but if you’re still a student or working on your first job, chances are, you haven’t built your credit yet and qualify to mainstream loans. Don’t be frustrated, you can build your credit by starting with third-party lenders. Here’s a guide on how to get a loan with no credit.
Consider a Credit Card
Credit card issuers typically look for your credit report if you want to get a card from them. This is merely a protocol to ensure that you will be capable to pay credit card bills. But since you don’t have the said report to your name, you must obtain a credit card that doesn’t require it.
One of the best ways to do so is to get a secured credit card. You’ll have to provide a security deposit so that unpaid balances on your card will be charged on that said deposit. This way, the credit card issuer has some form of leverage against your missed or late payments. You could also consider being an authorized user of another person’s credit card. If you’re an authorized user of your mother’s credit card for instance, you still get to use a card with your name on it, but you’ll have no legal obligation to pay off the bill. But since you’re aiming to establish a credit history, it’s best to settle all your credit card bills on time and in full.
Consider Getting Personal Loans
If you need money right away and getting a credit card is difficult or impossible at the moment, you may consider getting personal loans instead. Take note that a lot of mainstream lenders will still require your credit report so it’s best to take your business where you can get away without credit checks.
Fortunately, a lot of third-party lenders are offering personal loans. While most banks operate, grant and reject loan applications based on risks, private lenders are savvier about lending to you as long as you’re able to provide financial capacity to pay the personal loans back. This means that you can have a checkered or zero credit history and still qualify if you’re able to show proof of income.
The Stakes Are Higher for Loans with No Credit
If there’s one thing that you need to understand about no credit loans is the fact that you’re dealing with relatively more risks. First of all, you don’t get to negotiate a lower interest rate because lenders are unable to see what your financial past looks like. The most they could do protect themselves is to impose higher interest rate.
But there’s a silver lining. How to get a loan with no credit you have to contend with limited credit and higher interest rate for the meantime, you will soon enjoy better deals if you’re prompt with your payments. In fact, this is the best thing that you can do to put good credit to your name on your first loan or credit card.
Take a Look at Your Finances
Once you have established your credit, it’s now a good time to take a look at your finances. Pull out your credit report from the three credit bureaus and compare them side by side. Determine how you fare with your last loans and bills and see what you can improve on to bring your score up. Also, make a list of your assets and liabilities and draw out your financial goals. You need to realize that all of these things are interlinked with each other.
It’s a good idea to start building your credit when you can and when you’re already able. But that doesn’t mean that you shouldn’t be taking loans or credit cards recklessly. Start it right by finding a good and reputable lender with the best and most affordable deals that you can find. Of course, make sure that you can afford your credit and you’re committed to being a good with your payments. When you add them all up, you’ll find a more pleasing credit history to your name.