Understanding no credit history and its implication
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Understanding no credit history and its implication
Posted: August 10, 2011 Updated: September 28, 2018
The content is accurate at the time of publication and is subject to change.
Having no credit history is beneficial in many ways, and has many disadvantages too. Many people do not want to enter into the credit system of finances and maintain their healthy finance status. But having no credit, means there is no credit history to refer to, which makes it difficult to handle the financial emergencies. Credit cards are the most common way to build the credit history, and people without a credit history certainly do not have a credit card in their name, to avoid being in debt. There are both pros and cons of having no credit history. Some of them are listed below:
Pros of having no credit history:
Having no credit history means having no credit cards or loans. Being in such a financial state is certainly better than being in debt.
People without the debt situation can manage the flow of the money in and out of their accounts since they know exactly what they spend on and how much more leverage they have. Without credit, it is impossible to cross that limit.
Since there is no credit history, there is no lure of credit cards and unnecessary purchases just to make use of the offer that the card gives. Also, a good savings plan can be put in place without any debt that should be paid off.
Cons of having no credit history:
Since credit history is the most referred document in financial world, having no credit history does not establish the credibility of the individual, which gives rise to a lot of problems.
Getting loans like auto loans and housing loans become almost impossible without a credible financial history. Credit scores will make the job much easier.
Even if there is no loan requirement, credit history plays an important role in all other daily activities. Apartments, utilities like cable, electricity and much more all come with a credit history check, to verify the credibility of the individual. Having no credit history makes it very difficult to get along with all these situations.
How to deal with No credit history:
Having no credit history is not the end of financial life. There are many ways to get around the situation although difficult.
Credit history can be replaced with documents like recommendation letters from employers, universities, or previous land lords and even banks where the account is kept.
There are many ways to build credit history if the individual wants, and many ways to avoid it as well. Credit history can be successfully built by applying for personal loans with very high interest rates, secured credit cards, and the likes. High interest loans and secured loans do not need credit checks, but will report the activity to the credit check union.
Apartments and utilities can be obtained with valid income proof, recommendation letters from employers and so on. Many apartments that belong to individual owners can be rented without credit checks. Personal loans on the internet do not need credit checks but will have a specified low time frame for payback. Payday loan is one more option to explore which does not need credit checks.
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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