How Banks deal with No Credit History Cases


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Credit Card Applications » Research » Guides » Building Credit History » How Banks deal with No Credit History Cases

How Banks deal with No Credit History Cases

The content is accurate at the time of publication and is subject to change.
Having no record of one's relationship with one's bankers, or better yet, having no relationship with the Banking world is a tricky place to be in if one requires a loan. It is highly unlikely that one would have no record of bank statements if one has had other previous dealings with banks. Even if the individual has misplaced them, they can always be obtained from the bank. The only way a person can provide no record is when they have never had dealings with banks. Most often, students fall into this category. With no previous need to visit a bank, students find themselves at a loss when applying for funding or educational loans from private banks. Government banks are a marginally different system when it comes to dealing with students and educational funding. For private banks, the risk is a lot higher. Logically and understandably, a bank would think several times before dishing out money to someone purely on faith. What then, what is faith worth? To completely trust that a student will repay the loan amount seems a long shot. However, fortunately the financial agencies have a very tight legal mechanism to deal with those who fail to pay up. Even so, no bank wants to run after every other customer. In order to avoid such problems and risks, Banks usually ask first - timers to bring a co- signer. The Co- signer's credit history is scrutinized and a decision is taken. So, finally, some credit history is involved in the proceedings. Sometimes, for reasons to many to cite, a student may be unable to find a co- signer. In such cases, the bank will look into every small, seemingly irrelevant person detail of the applicant and decide if a loan is worth giving. The loan is ultimately given on good faith. Student loans are usually the only sort to face this issue. Where other loans are concerned, the bank will be able to identify some source of reference to help it get a holistic picture of the applicant. Money is perhaps the most dangerous commodity to deal in. Money does strange things to people. There is no fool proof way of deciphering whether a person can and will return the loan promptly. Even though a person has an impeccable credit history, something may happen which may make it impossible for him/ or her to return the money on time, if at all. It is true that the concept of credit History is a useful one to acquaint yourself with. However, even banks have a number of ways to check the credit worthiness of a person before sanctioning a loan. Credit History remains the all - important way of doing so, but what happens if there is no history to reckon with, as we have discussed above? The system is not completely in place. It is a system that is a work in progress, refashioning and remodeling itself according to the needs that arise. But until a newer, better system hits the market; it might help to see about getting a good enough Credit History.

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.
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