Good credit makes it possible to buy a house or a new car. When lenders see that you pay all your debts off in time, they will be clambering to approve your loans. But what about when you don’t have any credit history? How do you get approved for loans with no credit checks? Here is a quick guide to getting that first loan approved.
How Can You Have No Credit History?
If you have never taken out a loan or credit card before, you will have no credit history. It is possible that you have borrowed money from payday lenders, pawnshops, or even some finance companies that do not report your payment history to the credit bureau.
What Are The Options For Getting Loans With No Credit
Get A Cosigner- If you have anyone who will co-sign for your loan, this is a great way to start your credit history. Be sure to understand that your co-signer is agreeing to pay the loan in-full and on-time if you fail to make your payments. This can cost them money and hurt their credit. Find A Lender Who Specializes In First Time Loans- There are many excellent companies that will loan money to first-time borrowers. Be sure that you fully understand all the terms of this loan. If there is collateral, be aware you could lose your car if you don’t pay on time. Verify that they will report your payments to the credit bureau. Apply For a Student Credit Card- Many credit card companies will approve first-time borrowers who are enrolled in college. Pay the balance off in full every month and you can build credit for free.
What Types Of Loans To Avoid
Payday Loans- These loans give you a cash advance in exchange for pulling the money right out of your account on your next payday. While this may seem useful in an extreme situation, they can be a real trap. They are very expensive and they do not report good behavior to the credit bureaus.Title Loans- These companies hold your car title and will take ownership of your car if you don’t pay it back on time. These loans are often predatory and do not help you build credit. For an auto loan at a car dealer, get a written promise that they will report to the credit bureau. Pawn Shops- Pawn shops are also very expensive and will not report to the credit bureau.
How To Get Started
Once you have identified a legitimate loan company and are ready to apply for a loan, here is what you’ll need to get approved.
Plan a budget- Write down how much money you make and all your expenses. Then figure how much of a payment you can afford.Bring your documents- You will need your identification, proof of address and income verification. Bring your co-signer- If you have a co-signer, have them come with you for the application process. This will give you an experienced partner as you determine whether the loan is right for you.
Build Your Future!
Taking out loans with no credit is the first step to building great credit standing. When the unexpected happens, you will be assured that you can qualify for credit to keep you on your feet. When you are ready to do things like buying a house or a car, you will look back at the time you first got started. This is the beginning of the journey to achieving your goals in life.