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While online journals and newsletters may say otherwise, having no credit history is not the worst situation you can find yourself in. As far as bank transactions and dealings go, having no credit history will prove to be a setback. However, must remember that you can always start compiling a credit history. Having a bad credit history, now, is the worst position to be in.
Students with no credit history
Students rarely have much trouble getting loan sanctions and credit card approvals. For student applicant, many banks require the presence of a co-signer, In case the student does not have a credit history. In fact, records show that of the total number of people with no credit histories, the majority are students. The position is highly justifiable. Most kids do not have the need to open independent accounts and make financial transactions on their own. In most cases, the first proper bank experience could very well be a student loan for college. As mentioned above, banks have worked out this detail while formulating a loan sanction procedure - which involves inviting a co-signer to take part in the dealings. However, if the student cannot find a co-signer with a good enough credit score, then the bank may review the student personal property of value assets. The loan amount is usually sanctioned against the collective worth of the assets.
Risk and a no credit history predicament
Credit histories help banks and credit card companies evaluate the risk potential of a customer. The risk potential is the only factor that is uppermost when a bank decides to review an application. For those with a credit history, evaluating the credit worthiness or the risk potential should be simple enough. But what does one do when there is no credit history? This is where the co-signer comes in. As far as bank loans are concerned, it will sanction a loan as long as it knows that the interest will be paid on the loan and the capital will be eventually paid. Given this assurance, a bank will sanction a loan instantly.
There are instances when a bank may sanction a loan in favor of a person who has no credit history and is not a student. This is possible if the person has an impeccable record otherwise. For those who have no credit score, making one will take time and consistency. It is easier to acquire a good credit score than it is for a person with a bad credit score.