So you’ve weighed up the pros and cons and have decided it’s time to apply for a loan for that holiday or car purchase? Fantastic! However, you’ve hit a bit of a bump in the road and realised that you don’t have any credit history. Don’t close that tab on your dream car just yet. There are a few ways to get around the whole “no credit history” thing and get you on your way to that shiny new car. Even if you have no credit history and you are looking for a loan it’s not as hard as it may appear to get credit! It can be a little trickier but we have a few tips and tricks up our sleeves to help you.
I have no credit history, so how do I go about getting a loan?
There are a couple of things that you probably haven’t considered when you are trying to get a loan and have no credit history. Here are some alternatives to show lenders that you’re financially responsible and a low-risk borrower!
Having a steady income is a great start! This shows lenders that you have a reliable cash flow coming in which shows that you have the means to make your contractual repayments.
Having a good history of paying your bills will also get lenders on your side. After all, your future lenders are looking for proof that you can make your repayments. See where we’re going here? A good history of repayments means a higher chance of getting approval for your loan. If lenders can see that you have been a reliable borrower in the past, they’ll have a lot more confidence in your ability to meet the terms of your loan.
Another potential avenue is asking your landlord to provide you with a report to show your rental history. This report is further proof that you are able to handle substantial repayments and can work in your favour when you are applying for credit.
If you can’t get your landlord to play ball with the history report (after all, legally they don’t have to) you can check with the three credit reporting agencies and see if you can get a copy of your rental payment history.
The three reporting agencies are:
- Dun and Bradstreet
Lenders will also look at your savings habits and overall relationship with money which could be hugely beneficial to you. Having a good handle on your finances looks great to lenders! If you can show that you’re able to regularly put away some savings every month and don’t overdraw your account constantly they may consider you a good lending risk, despite your lack of credit history.
Will opening a credit report help?
Yes, most definitely! If you’re happy to wait for a little while before making your loan application you should definitely consider opening a post-paid mobile phone account and getting your credit history kick-started. Keep on top of your repayments and before you know it, you’ll be well on your way to the beginnings of a great credit history!
You also have the option of applying for a credit card to get your credit history started. There are a number of credit cards out there that are specifically designed for people with little to no credit history. Same deal as above, keep on top of your repayments and you’re a step closer to being approved for that loan! Just remember, if you are interested in trying this route, don’t make too many applications! Pick one card that is right for you and apply for that one. Having multiple applications at the beginning of your file can be detrimental to your credit score and could do more harm than good.
What can you do to get a positive credit report?
So, you’ve decided to kick off your credit report by applying for a credit card or postpaid phone plan. Now, how do you go about ensuring that your credit history keeps improving and you’re moving towards that personal loan you wanted?
- Pay your bills on time!
- Try not to switch credit lenders too often. The more lenders you apply through, the more it will affect your score, so be mindful of this!
- Ensure you always notify lenders and billers when you change addresses.
- Only apply for credit when you actually need it.
What about if I have previous bad credit?
Can I still get a loan if I have had bad credit before?
We understand that not everyone has a new credit report or even a great one. But don’t fret too much, there are ways to improve your history and present yourself as a great candidate. This is where positive credit reporting comes into play in helping you to start improving that credit score.
With the new changes to positive credit reporting you can show lenders how you have improved your financial habits. Keep on top of your repayments and start using the new system to your advantage to get that score up.
What is positive credit reporting and how can it help my loan application?
Positive credit reporting is a new and exciting update to credit reports. Positive credit reporting, also known as Comprehensive Credit Reporting (CCR) is a new initiative to help lenders and consumers benefit from being able to identify customers who are doing the right thing and paying their bills on time.
The basic idea is that credit reporting companies are now collecting much more data to form their scores. This data includes both the negative and the positives! Previously, credit scores only reflected negative aspects, such as defaults or infringements. Now, positive reporting accounts for your positive habits (such as successful repayment history to utilities or bills) as well. This is making it so much easier for those with limited or no credit history to get their loans approved. The longer your history of successful repayments the better your chances of success will be!
Positive credit reporting is also beneficial to people with no credit history who want to start building their history! If you’re approved for that small credit card, positive credit reporting will work in your favour by reporting on your good repayment history with your new commitments. This shows other lenders that, even though your file may be recent, you’ve started out strong!.
So, whether you have no credit history, limited credit history or bad credit history, there are ways to work towards that personal loan approval. So go on, open that car tab back up because it could be closer than you originally thought!