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Get a Loan Even if You Have Zero Credit
You need a loan badly, but you have not yet established a credit history. Similar to having bad credit, getting a loan when you have zero credit can be very challenging.
It may be challenging to find a lender who will extend a loan when your credit is basically non-existent. Nonetheless, it is still possible if you know where to look. Don’t be tempted to go to loan sharks – there are plenty of online lenders who will entertain your application even if you have no credit reputation yet.
Yes, you read that right. Aside from accommodating your loan request, these lenders only run a soft credit check which is great for those with bad and thin credit. Here are the things you should focus on if you want to get a loan approved despite having no credit history.
You should be employed for the last six months. A stable job will help you land a loan even if you don’t have any credit rating. It’s worth noting in your application form if you have a title, such as professor, engineer, doctor, lawyer, et cetera. Lenders will take note of this and it can help you get a loan much faster than you think.
Salary is always an important factor in your application form since lenders will want to know if you can pay them back. Remember that lenders will still compute your debt-to-income ratio to measure your affordability.
When filling up a loan application form, strive to be honest in all the information you supply. Faking information will surely put your application form in the rejected pile by doing so.
Getting a loan when your credit is bad is hard. It is equally challenging too when you’re trying to take out one without a credit history. Without any credit record to show, lenders will have no means of checking how much of a credit risk you are- something they need to gauge to determine how likely are you to default on a loan.
How Credit Scores Are Calculated
A credit score is calculated based on your behaviour on credit instruments that you have taken out in the past. It is where lenders can check if you have paid late on your bills or even defaulted on past loans you have been approved for. If you have no record, then they won’t be able to assess your creditworthiness and if you’re trustworthy enough to handle a debt.
What to Do When Your Credit File Is Thin
Understandably, lenders will be reluctant to let you borrow anything if you do not have much on your credit file. You’d think that lenders will be happy to lend you money if you have never had to borrow money in the past nor got a debt. This isn’t the case so you need to build your file.
The simplest way to do so is to open a credit card. However, only consider this option if you are sure that you can be a responsible borrower. Just see to it too that you are making at least the minimum required payments every month so you can slowly but surely build your credit file.
You can also build credit by ensuring that your utility bills are paid on time. This is especially true if you will set up a direct debit in order to get your bills paid. This will reflect well on your credit record as lenders can see this as a sign that you are responsible financially. Thus, making it easier to convince them to lend you money when the time comes that you will need to take out a loan.