How and Why To Get A Loan With No Credit
The biggest reason to take a loan should be due to emergency needs. Indeed, emergency needs can happen to anyone in this universe. And, of course, no one can stop an emergency. However, there are means of managing those needs, whereby one means is getting a loan.
But it becomes more challenging to get a loan with no credit history. Most lenders would like to see your previous financial behavior before they can give you a loan. That’s why getting a loan with no credit history can sometimes be problematic.
However, there is a slight chance because lenders can accept to loan you with no credit history. But do you know why you may not have a credit history? Well, if you have no credit history, you are in the same league as those with bad credit history. This is because the same lenders will favor you.
Why you don’t have a credit history
- The biggest reason why you don’t have a credit history is that you have never borrowed before. There is no chance of having a credit history without any history of borrowing.
- You might have migrated to a new country. But, of course, you will not migrate with your credit history from your home country. Once you get into another country, you will have to start fresh.
- You have not borrowed in the past seven years. The credit Bureaus keep your credit records for approximately seven years. So, if those years elapse without borrowing, you will have to start from zero.
Why do you need a loan with no credit?
There are many reasons as to why you may need a loan with no credit score, which includes:
- To pay bills
- For education
- To do debt consolidation
- You may need to go for a vacation
How can you get a loan with no credit?
- Get a co-signer
A co-signer will help you get a no credit check loans guaranteed Australia whether you have no credit history or a bad credit score. It can be a colleague or a relative who may be willing to help you secure a loan.
However, you better be willing to repay the loan on time if you do not want to ruin relationships.
- Get credit builder loans
These are loans that you get purposely to build your credit. Once the lender approves your loan, they will hold the money till you repay the loan in full. So, this kind of loan may not be suitable for an emergency, but it will help you build your credit score.
The traditional banks, SACCOs, or credit unions give credit builder loans. The lender will report your repayment pattern to one of the three credit bureaus.
- Get a secured loan
Regardless of your credit score status, you can quickly get a loan once you have a valuable asset. In addition, no lender will miss the opportunity of lending a client who has collateral.
However, you should be careful not to lose your property if you don’t repay the loan. The lender usually repossesses your property if you don’t pay as agreed.
- Online lenders
Most online lenders will only need you to prove that you have a source of income, and they’ll give you a loan.
For instance, payday loan lenders can provide you with a loan once you have a steady job for the last three months. However, they have very high interest rates, and you repay within 14 days.
The bottom line
It’s possible to get a loan while you have no credit history. But if you need a long-term solution, it’s advisable to build your credit from the word go.
However, find ways to create more sources of income and try as much as possible to stay away from debts. In addition, if you have to borrow, take a small amount that you can manage.