If you don’t have
credit yet, you should see to it to start building one as soon as possible. You
should get a credit card or apply for a loan and make on-time payments on what
you owe to receive an excellent credit score. Yes, that’s the best way to establish
your credit profile.
When you’re just
kicking off your journey to this goal, it’s normal to worry about not getting
approved for a loan because you have no credit history. But you have to keep in
mind that you can still qualify for a loan even without credit.
Just make sure to use
the loan for a good purpose and avoid having too many debts (here’s what to know about investing, budgeting, and debt reduction).
For you to obtain a loan despite your credit situation, take some time to read
this article to learn how to get one.
Take Out an Online Personal Loan
An online personal
loan is one of the most preferred money borrowing options for people with no
established credit history. Since you’re working with an online lender, there’s
a possibility that you won’t go through a tight credit check during your loan
application.
Typically, your
online lender will only ask you for a proof of income and employment certificate
as requirements to get the loan.
Work with a Co-Signer
Working with a
co-signer is another tactic to secure a loan even if you don’t have yet an
existing credit profile. The person who will co-sign the loan with you can be
your friend or relative (in fact, anyone whom you trust). But you should keep
in mind that your co-signer should have a stellar credit history to boost your
chances of obtaining the loan.
The person who
co-signs with you for the loan should also understand the responsibility of
being a co-signer. In such a time when you miss payments or you default on the
loan, your co-signer will have to pay the unpaid amount. If ever he/she won’t
continue repaying, his/her credit profile will receive bad marks.
If you’re going to
borrow money with the help of a co-signer, have some good sense of paying the
loan on time to avoid putting your co-signer’s credit profile at risk.
Go to a Lender Who Conducts Non-Traditional Credit Checks
Mainstream lenders
and major lending institutions follow strict rules when checking a borrower’s
credit profile. That’s why not all loan applicants get approved for a loan due
to such stringent credit checks.
That’s why if you
need to borrow money without having an established credit history, go to a
non-traditional lender. Your credit score is not a big deal to non-traditional
lenders, but you still need to show that you have the means to repay the loan
by providing your recent payslips, bank statements, and certificate of
employment.
You can browse the
internet and compare the loan offers of non-traditional lenders. There are
direct lenders and lending networks that can give you an advantageous soft
credit check loan.
Apply for an Alternative Payday Loan
Another
credit-building loan that you can get is an alternative payday loan. Members of
credit unions can apply for this loan and receive a small loan amount with a
repayment period of 1 to 6 months. It’s an excellent loan to build your credit
because it’s much easier to repay than a regular payday loan.
Aside from the loan
term and loan amount, alternative payday loans have affordable fees and rates
than regular payday loans. Perhaps the only catch with this loan type is that
you need to be a registered credit union member to avail
of it. Usually, a borrower needs to be a member of the credit union for a few
months to get qualified for this credit-building loan.
Get a Secured Loan
Lenders who offer
unsecured loans require you to have a good credit history if you want to borrow
cash from them. Your good credit score serves as proof that you’re a good
payer, so you won’t find it a challenge to get such loans.
But what if you’re
just starting to establish your credit profile?
Well, if you’re in
this situation, don’t worry much because there are secured loans that allow you
to borrow cash even with no credit. As its name suggests, this loan type
requires you to have an asset that you can put as security against the money
you owe. If you default on the loan, your lender has the right to seize that
asset in exchange for your non-payment.
You can offer either
your car, home, land, bond, mutual fund, stock, or a collector’s item as
collateral against the loan. Since the loan is secured with collateral, there’s
a chance that you can enjoy an affordable interest rate.
Takeaway
If you want to build your credit profile,
you should take note of the ways mentioned in this post to achieve your goal.
Even with no credit, you can obtain a secured loan, alternative payday loan,
soft credit check loan, or online personal loan to start your credit-building
journey.
