Some people hesitate to get a credit card because they are afraid it will reduce their credit score. The fact is, having no credit can be just as negative as having bad credit, when it comes to applying for a loan. If you do not have credit, but are seeking a loan, here are some things you should do.
Step 1: Look for no credit check personal loans. These are usually intended for people with poor credit history, so the terms may not be favorable. They often have high interest rates but check them out and see what you find.
Step 2: Get a co-signer on a personal loan with a bank. A co-signer promises to pay the outstanding debt if the loan holder is unable to do so. There is some risk involved in serving as a co-signer because if he or she cannot repay the outstanding loan balance, a negative mark will appear on his or her credit report. In addition, the loan itself will appear on the credit history of the co-signer, which could inhibit the ability for that person to obtain credit for his or her own use.
Step 3: Continue to save money so that a larger down payment can be made. This is helpful when purchasing a car because the larger the down payment, the smaller the loan amount required. As you save money, stash it in a high-yield savings account to get the benefit of additional interest.
Step 4: If applying for a student loan, complete the Free Application for Federal Student Aid (FAFSA) form to see what loans and grants you can receive. Apply for loans for those in need, such as the Perkins Loan and Stafford Loan. If you are a non-traditional student, check with the school’s financial aid office to see what additional grants and scholarships are available.