Credit Score

Want to Avail a Loan, But Have No Credit Score? Here are the Steps You Must Follow

May 11, 2022
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No matter how ready you are in life, at times, due to a financial crisis, you may require instant cash. Availing of loans must be your last option. However, it all depends upon your urgency. If you are a first-time loan borrower, your basic challenge may be to figure out the lenders that may be ready to endow you with funds with zero credit history. Credit history is nothing but a record compiled with recommendations on how you can manage your debts with various banks. A credit report contains info or data about your payment routines, repayment credibility, your current loan, and others. 

Listed here are some tips that can assist you in availing funds without any credit history: 

Take a credit card

Among the various methods for forming a credit history, availing of a credit card is the most common one. It is simple to avail yourself one if you are employed. However, the major thing you must be cautious about with your credit card is the credit limit you use. You must not surpass the 30 percent of your credit limit, for this may create a negative affect on your credit score. By repaying for invoices in totality and using your credit card in a disciplined manner, you can form a good credit score on your report. 

Add a co-applicant

If somebody having a credit score is prepared to turn into a loan co-applicant, then it might compensate for your inadequate credit history. You must be careful in such scenarios. Ensure to discuss all crucial loan obligations when adding a co-applicant as he/she is equally liable for the loan repayments. 

Provide security or collateral

Personal loans are not secured in nature. In other words, they are not backed by any security or collateral. However, if you are unable to avail a personal loan or funds during instant financial conditions, you may consider providing security like your car, home, or property. Providing security or collateral is a good way to avail of a loan easily, as in such cases, lenders do not focus much on your credit history. 

Make an application through the digital route.

Digital loans are one of the best ways to avail of instant loans. Online loan providers like EarlySalary, PaySense, MoneyTap etc., are often more lenient than conventional lenders. They do not review your credit history before offering you the required amount. But if you hold a stable and large income, then you have the chance of securing a loan. Moreover, loans are convenient and flexible. It is easy to evaluate your loan eligibility by opting for such online platforms. The loan proceeds are often disbursed on the same day of loan application submission. However, remember that such loan providers often offer the loan at a higher interest rate owing to the attachment of higher risk. 

Importance of credit score – How to check free CIBIL report?

When applying for any loan, the CIBIL score, as mentioned earlier, is one of the most crucial parameters considered by lenders. A strong credit score also helps to satisfy your eligibility criteria when you apply for a loan without any salary slip or salary proof. This goes without saying that a credit score is necessary for anyone looking for assistance. CIBIL score represents your credibility, particularly when you apply for a personal loan that is unsecured in nature. However, with an increasing number of lenders providing new offers and schemes to make financial services highly accessible, availing of a loan instantly without a credit score is even possible today. You can check free CIBIL report either by visiting online lending platforms or credit bureaus. 

What is known as a credit score?

You must perform a free CIBIL score check before applying for any loan to know your eligibility. This is because, for any loan without any security or collateral, a CIBIL score check is performed to understand your eligibility. A credit score or CIBIL score is a 3-digit numerical summary of your credibility. The score is simply maintained by CIBIL and is utilized to evaluate if you will be able to pay the loan amount by the due date. All the financial institutions and banks share your data with the CIBIL, based on which your score is computed. Applicants applying for the personal loan without any income proof or salary slip even get approval based on their CIBIL score. 

What does no or low credit score signify?

CIBIL score ranges anywhere between 300 and 900, and anything below the 750 margins is usually looked upon as a low credit score. As personal loans are unsecured in nature that do not need security or any collateral, it signifies a huge risk for lenders. However, an excellent credit score reveals your history of payments and acts as a testament to show your credibility. 

Low credit score and zero income proof: Improve your credit score

CIBIL score changes depending upon your debt repayment status and credit data. It means that you can efficiently work towards ameliorating your score before applying for the loan. Note that 6 months of timely repayment of your EMIs and credit card bills can simply make you make your score stronger. Also, avoid having a lot of loans in your name and having a high credit utilization ratio are a few of the crucial factors to ameliorate your credit score. Once your credit score is improved, you can place your personal loan application. 

If you are unable to avail of loans through traditional lenders, opt for the digital ones.

If you are not able to get loan approval due to a low credit score from the traditional lenders, opt for the digital lenders, as they provide you with instant loans without laying much emphasis on your score. However, note that as the risk is taken up by the digital lenders a lot, they often provide you with such loans instantly at a higher interest rate. Thus, always ensure to check amongst different digital lenders before choosing one for the loan. 

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