Getting a personal loan without a credit history is not easy but it’s not impossible either. People who are young and/or always had their family’s support for financial matters never really felt the need to maintain a credit history.
If you do not have a credit history and are worried that your loan application will be rejected don’t be, because there are alternate routes. If you are a first-time applicant, lenders understand the absence of a CIBIL score, but they will be meticulous. You need to convince them why it is a good idea for them to give you a loan without having any past financial history. For such reasons, we have made a list of five tips to get a personal loan when you do not have a credit history.
Here is the list to get personal loan when you do not have a Credit history:
Get a Credit Card
The easiest way to create a credit history is by obtaining a credit card. If you are employed and have a constant income source, then it is easy to get one. However, keep in mind that your credit card bill should not exceed 30% of the credit provided to you. If you use the credit card responsibly for a few months and pay bill on time, you will be able to create a positive credit history for yourself.
Become a co-applicant
If someone has a good CIBIL score, then you can co-apply for a loan with them. Co-application implies that both parties are equally responsible for the repayment of the bill. If either one defaults, the other one has to pay the bill because it will affect the CIBIL score of both parties. So, this decision must be taken very carefully.
Most personal loans are unsecured, meaning they do not require any collaterals. But if someone without a credit history asks for a loan, they may have to pledge a security against the loan. A blank CIBIL report doesn’t give the lenders enough confidence to sanction a loan. Therefore, pledging a security reduces the risk on the lender’s side and enables you to get a loan.
While reviewing a loan application, banks look at three C’s – Credit, Collateral and Character. If the first C is missing, then they emphasize on the other two. If you have a stable job and enough money to pay EMIs then you are in a good position to get a loan. Owning a property also helps. Essentially, any factor that will convince the lender of a strong financial background helps you get a loan.
Apply for an Online Loan
An online loan is the easiest way to acquire a loan with no credit history. This because the online lenders are lenient compared to traditional lenders. As long as you have a steady income flow and the capacity to repay the loan, you are a good candidate. Moreover, getting a loan online has more flexibility and is more convenient.
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