Avail a loan with no prior credit history

By | 05/11/2016
You have never availed a loan in your life. You want to do so. You are confident of getting this loan as you have no credit history. Then a rude shock. Your loan application has been turned down. Why has this happened? Banks are reluctant to lend to newcomers as banks are not confident if their money will be returned. This makes them hesitant to do so, as banks prefer to err on the side of caution.
So how can you avail a loan from the bank?
You can apply for a secured credit card. The secured credit card is same as a normal credit card, except it is secured against a fixed deposit. The bank does not need to judge your credit worthiness, as you have a given a security in the form of a fixed deposit. Now all you need to do is make every single credit card payment in time. This will help build a good healthy credit score.
Banks will not sanction you a home loan or a car loan. But there is a way out. You can apply for a small consumer durable loan. Avail a consumer durable loan of a few thousand rupees. Make the payments in time. This will help you build a good credit history. After paying off this loan, you avail an even higher loan and make the payments in time. You climb up the ladder and soon you can avail a car loan or a home loan.
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