Even if you regularly save and invest, you may find yourself in a situation where you are short of funds. You may use your credit card to meet such requirements. However, if you do not have a credit limit, you may need to apply for a loan.
Loans may be secured or unsecured. Secured facilities like home loans are time-consuming. However, unsecured loans like personal credit are easily available if you have a credit history and a good credit score.
If you do not have one, you may find it difficult to apply for a personal loan. Here are five tips to help you qualify even without a credit history.
1. Build credit history
The easiest way to build a credit history is by procuring a credit card. Procuring one is easy if you are employed. However, when you use a credit card, you need to ensure you do not exceed 30% of the limit because it negatively affects your score. Using the card for a few months and making timely bill payments will help build a credit history.
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2. Be a co-applicant
You may ask your relatives or friends to become a co-applicant on the loan application with a good credit score. However, it would help if you remembered that both are equally responsible, and any default will negatively affect your credit score.
3. Provide security
Personal loans are unsecured facilities. However, if you do not have a credit history, the lender may require some security. With no credit history, disbursing a loan is risky, and when you provide collateral, you can reduce the risk to some extent.
4. Income stability
Credit, collateral, and character are the three important C’s considered by lenders. Therefore, if you have a good job and a stable income, lenders may consider your application, even with no credit history. Moreover, if you own a property, your risk profile is reduced, which helps make a loan.
5. Apply online
An online application may be the best option to avail of a loan in the absence of credit history. Online loans are flexible when compared to traditional facilities and improve your chances of approval. You may check your eligibility before applying to make an informed decision.
You must ensure that you do not make an inaccurate decision because you lack the required credit history. An error like being a co-applicant with someone you barely know may have severe repercussions. Several online resources are available, which provide beneficial information that will help you avail of a loan even when you lack credit history.
It is recommended you check these resources and spend time researching different options. Compare the facilities offered by different lenders before signing the dotted line.