In this day age usage of credit is commonplace and it is difficult to find anyone who does not service a credit line or two. However, to access timely credit, you need to have a good credit score. Without a satisfactory credit score, a prospective lender assessing your credit worthiness may reject your credit application. Some people still believe that having no credit keeps them insulated and is equal to a good credit score. This is, however, a misconception.
On the contrary, having no credit is as bad as having a poor credit score, if not worse. This is because if you don’t have any credit record to assess you by, your credit application may also be rejected by a lender. Therefore, it is important to establish and maintain a good CIBIL score. If you are wondering how to establish credit record from scratch, here are a few easy solutions for you.
If you are a youngster who has no credit record yet, and wish to go for higher studies, it may be prudent to access a student loan to do the same. A student loan or an education loan while sanctioned on the basis of the credentials of your parents is a good opportunity to establish credit. Repayment of this credit on time will help you open a good innings in terms of credit establishment and boost your credit score from the very beginning. Budgeting to repay your student loan is also a good exercise in credit building that you can inculcate from an early age and can help you maintain a good CIBIL score lifelong.
A secured credit card
As a person without any credit record, you may likely to find it difficult to opt for a regular credit card that is an unsecured form of credit. A good option for you may be to opt for a secured credit card. A secured credit card is available against a fixed deposit. Most commercial banks issue credit cards against fixed deposits, where the credit limit is capped at a certain percentage of the fixed deposit. A secured credit card is thus a good option if you have no previous credit record are in a pursuit to establish credit.
A personal loan
Life is uncertain and may throw a curve ball at you at a time when you are ill prepared financially. At such times if you may consider a quick personal loan. However, without a previous track record of credit, a personal loan too may be difficult to get. In such a situation, do not despair. You can look beyond a traditional lender at such times.
You may consider a non-traditional lender such as a P2P lending platform. These are a virtual loan market place where you can directly connect with a lender who may be willing to lend you the amount you need at an attractive personal loan interest rate.
The advantage of opting for a loan from such a platform is that these lending platforms take into consideration atypical factor for credit assessment such as future earnings scope and social media footprint, rather than fixating on the credit score of the individual. This makes it easier for an individual without a credit record to opt for a personal loan.
Another option may be to get a family member or a trusted friend with a good credit record and satisfactory credit score to co-sign on the personal loan when you opt for one from a traditional lender. By doing so, his or her credit record is taken into consideration while approving the loan, in the absence of your credit record.
However, do bear in mind that the co-signee is in effect taking responsibility of repaying your loan, by co-signing on it, just so you get timely access to finances at a competitive personal loan interest rate. Long story short, you do not want to jeopardise your relationship with a person who obviously cares for you. The onus is therefore on you to be completely sure of your repayment capability. Timely repayment of your loan will not only help you establish a good credit track record, but will relieve your co-signee of the burden of repaying your loan on your behalf.
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