The content is accurate at the time of publication and is subject to change.

Most people rely on credit so they can live a good life. Loans and credit cards are what they use to have the basic necessities such as food, shelter and clothing. These are also use for them to have those not so necessary things such as luxury and other extravagance used to pamper oneself. For them to be able to have these, they need to have a good credit history for them to be approved of loans and credit.

But what if you have no credit history?

If you do not have experience in taking out a loan or a credit card and only used cash for your daily expenses then you will be considered as no credit history. Most banks look for your credit history for them to evaluate whether they can approve you for a loan or even a credit card. So if you do not have one, you will have difficulty in getting one.

So in order to have credit or loan, you need to have credit?

When you look at it that is how it works because creditors need to see how you handle debt. They need to see how you are able to keep up with your payments and if your resources are enough to pay all your debt. But you don't have to worry about not getting a loan just because you have never taken out one. All you need to do is to convince the lenders that you are able to pay what you will owe. Of course, you need to present them evidence that you have money to pay for it.

How will they know if I have no credit history?

Aside from you telling them that you never took out any loan or credit, they will consult with Credit Reporting Agencies. These agencies are responsible for taking record of all people with or without credit. They have information about how you are with your payments and whether you incur late ones, if you have filed for bankruptcy and even incarcerated.

How can I convince lending institutions that I can pay if I don't have any credit history?

First thing you need to do is to give them proof that you have the money to pay for bills. This may be proof of income for the last six months or a savings account or a checking account that shows tat you have direct deposits. Next, you have to show them that you are paying your utility bills on time even if you are using cash. You can show the proof of billing and the receipts when you paid them. You will be giving them contact information of these companies for them to confirm as well.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.