Credit Score: How to get loans, credit card despite not having history

Published: February 6, 2018 1:47:08 PM

If you have never borrowed before and not been able to secure credit in the form of loans and credit cards from lenders, it is probably because you do not have a credit history.

 No credit history? Relax, you can still get loans, credit cards Not having a credit history does not anymore mean missing out on credit when you need it the most.

If you have never borrowed before and not been able to secure credit in the form of loans and credit cards from lenders, it is probably because you do not have a credit history. Yes, your credit history which can be represented numerically in the form of a credit score is very crucial in securing loans. With a good credit history, you can get better terms on your loans like rate of interest, loan amount and tenor.

It is an odd situation wherein “to get credit you need to have a history of credit” and if you are staring at this scenario, then this article is for you.

What Constitutes Good Credit History?

Before we look at the options available for those who are new to credit, we need to establish what constitutes as good credit history.

At the face of it, a credit score above 700 on the credit bureau is considered to be good, but to accumulate the same involves steady handling of credit, regular repayments and a good mix of secured and unsecured loans.

Building a good credit history takes time but in the end, it is rewarding to be accredited as credit worthy by lenders especially in these times of rising bad loans.

How Do I Build a Credit History?

While you can get loans and credit cards without a credit history, but not necessarily at rates which are agreeable to you. Therefore, looking at building a solid credit profile would be the way to go.

Score Builder Products: These are specifically created loans that enable you to have an active credit account. These could typically be short term personal loans or a secured credit card which can be obtained with a fixed deposit as collateral. The credit limit on your secured credit card is proportional to how much you have invested as a fixed deposit and you can receive potential double benefits of having a credit card which gets you a credit score and your FD can earn interest from the bank.

Alternate Lending: Last year was seen by many as a landmark year in digital banking, with a tremendous increase in digital payments which followed the structural changes. It is now clear that digital banking is the way forward. In the digital banking space which runs on data, lenders are constantly thinking about you, the customer; trying to customize to your every need and creating new credit products.

While traditional lending systems utilize formal data such as information from credit bureaus and bank statements, there are now tailormade products from some lenders which use alternative data sources to supplement to your credit profile.

It might seem something out of the future, but your social media profiles like Facebook and LinkedIn can get you a credit card now, especially if you have never borrowed before.

The digital age has also put the mobile phone at the centerpiece of personal banking which has considerably eased cumbersome processes like customer verification and document collection, bringing more into the ambit of formal credit.

So, not having a credit history does not anymore mean missing out on credit when you need it the most. As there are varied options which help you begin your credit journey, but building and maintaining a healthy credit history has become more important.

There is a whole year ahead and it is now the time for you to take a resolution to build a good credit history.

(By Ranjit Punja, CEO & Co-Founder, Creditmantri.com)

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