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Credit history is the record of borrowing and repayment of debts and loans pertaining to an individual. When the individual has repaid all his loans on time and without defaulting on even a single payment, he is sure to have a good credit history. On the other hand, if the borrower defaults in repayment of the loan then he is bound to attract a bad credit history. However, if a person has never had a credit card all their lives or have not taken out any loans, that individual will not have a credit history.

Consequences of no credit history

While a bad credit history will severely affect the financial status of an individual, no credit history fares a little better as in this case an individual has neither bad nor good credit scoring. He can build a good score with proper actions. It will not only help the person in getting any loans approved but will also help him to avoid getting higher interest rates or keeping mortgages against the loan amount. As the financial credibility of the individual becomes stronger, so does availing basic utilities like electricity and gas connections.

With the following steps a person with no credit history can get a credit.

  1. Keep in hand all the financial deals that you have made. Organize financial documents and information in one locker or file, neatly indexed and preferably organized in chronological order. It is important to keep your tax returns handy, and also the bills of large ticket purchases, in order to show proof of your income.
  2. Although you might have no credit history, do collect the free credit report that the FCRA allows per year, and check for any discrepancies or errors.
  3. Some banks agree to start off a limited amount of credit if you have a long standing savings or current account with them with reasonable account balances and no cheque bounce instances. You could talk to the loan officer of the bank where you maintain your account for information about such lines.
  4. Online applications for loans could also be made to banks which offer certain loan products to people with little or no credit history. Peer to Peer Lending could also be an option to explore.
  5. If you have the capacity to repay a loan on time, and also own a property, then you could use that property as collateral for a personal loan even without having any credit history.

While trying to start getting a loan for getting a credit history, please remember that no credit is much better than bad credit, so you can try out the above options only if you are very confident about your repayment capabilities.