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A person having no credit history is someone who has no previous record or history of a previous loan or financial dealing. This loan or financial dealing can be of various sorts; a car loan, a credit card etc. It could even include persons immigrating to country and therefore possessing no useful financial records which can count as credit history.
Credit history is an important part of financial as well as non financial dealings nowadays. A credit history is supposed to determine the creditworthiness of a customer. Most banks and financial organizations require a record of a customer's previous dealings before sanctioning a loan to them.
When a person has no credit history, most financial organizations require the customer to bring in a co-signer who does possess a credit history, especially if the amount to be sanctioned is a large one. This happens mostly in the case of a student loan. Students are increasingly resorting to loans to pay their way through college and other educational programs. Most students do not have credit histories, having never taken a loan, or possessing a credit card. The student is then required to find a co-signer who is considered trustworthy by the bank.
Some agencies are ready to make deals without needing a credit history as a prerequisite. Car companies, for example, do occasionally allow buyers to pay in installments on purely good faith and nothing else. But remember that not all agencies do so.
Credit histories are not an essential part of bank and other financial agencies. For a first timer, like a student, most of these agencies are willing to make exceptions and give the customer the benefit of a doubt. Even in such cases, only small amounts can be hoped for. For large loans and schemes, Credit Histories are becoming a must. In some countries like the U.S, a good credit history can influence the job you get and the type of home you are allowed to buy.
Setting up a Credit History
Financial consultants are willing to prepare credit histories for those without. You must first check to see what creditors are saying about you. There is the off chance that someone else's credit history is mixed up with yours.
- If you are just starting out, take care to make your payments on time.
- Do not take out loans larger than those you can handle.
- And always avoid a bankruptcy. There is nothing worse than a bankruptcy to deter lenders from giving you loans.
Creditors may also compute records by talking to landlords; utility providers etc to find out if you make payments on time. A Bad credit record is worse than no record at all. Even though some banks do allow you to take home loans, for instance, with a poor credit record, the chances are that the amount promised may not reach you ultimately. If you are interested in setting up your credit history, remember that every payment counts. And every score counts on the score card.