Once out of the blue came a thought in your mind to explore the picturesque locale of Thailand. So, you applied for a personal loan at a bank hoping to get the required funds for the trip. There came the rude shock of loan application rejection by the bank. All your dreams fell flat as you wondered what went wrong as you had a healthy income to pay personal loan EMIs. Maybe you didn’t have a credit history showing how responsibly you have repaid debts. However, you are not alone in facing personal loan rejections due to the lack of a credit history.
But here’s a hack to a hassle-free personal loan approval for those without a credit history. However, let’s have a slight brief on credit history before glancing at the hacks.
What is Credit History?
A credit history represents the repayment behaviour you as a borrower have displayed over time. The history shows the repayment of different loans and credit cards. It includes a credit score, which ranges from 300 to 900. Credit scores in excess of 700 often result in a seamless approval for personal loans. Whereas scores of less than 650 often result in disapprovals.
People with no credit history will not have a credit score. The lack of a credit history often results in disapproval of a personal loan. The reason is evident. A personal loan is an unsecured loan for which borrowers don’t need to submit any collateral. So, as a lender, it becomes important to assess the creditworthiness of the borrower. A credit history showing the repayment behaviour and a credit score that follows gives lenders a clue of whether the borrower can repay the debt.
So, whenever the personal loan application comes, the first thing the lender checks is your credit history.
But does it mean, those not having a credit history can’t access a personal loan? Maybe not! We will find out how.
Hacks to Get a Loan with No Credit History
After the brief on credit history, let’s disclose the secret of availing of a loan with zero credit history.
Apply at a Bank Where You Have a Salary Account
Salary account holders tend to have a distinct advantage when it comes to accessing a personal loan. The statement showing the disbursal of salaries on a regular basis assures the lender of your repayment. So, apply for a personal loan at a bank where you run your salary account. However, the bank might require the salary account to run a relatively longer course in case of a higher loan amount.
Apply for a Loan Against Securities
A loan against securities is often compared to a personal loan because both of them help individuals fulfil various purposes such as travel, marriage, education, emergency needs, etc. So, you can pledge securities such as stocks, mutual funds, life insurance, fixed deposits and alike to procure a loan. Such advances come under loan against securities. Lenders disburse such loans to individuals even if they don’t have a credit history.
You can get a loan of around 50–60% of the investment value when pledging stocks or mutual funds. Whereas pledging life insurance and fixed deposits can assure you a loan of up to 90% of the value. Endowment life insurance plans with a guaranteed surrender value will merit a loan.
Loan Against Gold Ornaments
Although we Indians attach a lot of emotion to gold that we use for memorable days such as weddings, it can be used to procure much-needed funds in the case of an emergency. The loan gets disbursed against the value of the gold you pledge at the bank. Here the bank official will measure the gold weight and ascertain its value. You can get a loan of up to 90% of the gold value. You don’t need a credit history to access this secured loan.
Mini Loan Apps
Capitalising on the digital wave, many loan apps have emerged to fulfil the small loan amounts that early earners seek to meet their needs. Getting such loans doesn’t usually require a credit history.
Wrapping Up
Don’t lose heart in case the lender rejects your personal loan application on the grounds of no credit history. You have got many ways to access a loan. Maybe you will need to pledge securities and gold ornaments for the purpose. Paying the loan on time will help build a good credit history, paving way for new loan applications and fulfilment of new aspirations. For more insights on finance and important matters, visit zarooribaathai.in.
