Lenders label individuals with no credit history as 'high risk'. Being considered 'high risk' can be the 'kiss of death' when it comes to getting approved for unsecured loans. Why? Because unsecured personal loans require no collateral. So, the lender loaning you your money is trusting you that you will make timely payments. This is not a personal issue of trust, it is a credit issue. Lenders do not want to lend unsecured loans to people with no credit or bad credit, period.
By now you are asking yourself, 'How do I turn my no credit history into a positive one so that I can apply for a personal loan?'. Easy! Being labeled 'high risk' makes it hard to get approved for certain types of loans and credit, but not all.
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Did you know that car loans are one the best means for building credit? How? When you take out a car loan, you are securing your loan with the car that you are financing. If you don't make the payments, you lose the car. So, lenders are much more inclined to provide car financing to people with no credit before they approve an unsecured personal loan.
Another great way to build your credit history is to apply for a credit card. There are a few credit cards available that are specifically designed for people with no credit and bad credit. Be careful! You don't want to put yourself into debt with use of your new credit card. You want to make a few charges a month, that you can afford to pay for once you receive your bill. Utilizing and paying for a credit card will help build your credit very quickly.
A third means of building credit is to put some utility bills in your name. This means having the phone, electric, gas and/or water bill put in your name, making you responsible for the payments. Again, you want to make the payments on time, every month! Doing so will also help build your credit fast.
Applying for small personal loans will also help you quickly rebuild credit.
If you follow two of the above suggestions, you should be able to build a non-existence credit history into a good credit history in about one year. Then, when you need a little extra cash for a vacation, shopping, etc., you can apply for and hopefully get approved for personal loans.
When learning how to build credit, its important that you educate yourself about FICO scores and how they work.
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