How to get a loan with a "zero" credit history?
When deciding whether or not to give a loan, the bank looks at the borrower's credit history, and the larger the loan amount, the more comprehensive the verification. The bank declines in 80% of situations due to a poor credit history or when it is "zero."
It's crucial to understand that the credit history includes not only information about loans granted, but also information regarding bank refusals. As a result, there's a chance of destroying your credit history before you even start. A future mark of refusal may make it more difficult to receive loans, because financial institutions frequently "reinsure" and refuse because of a previous mark, not caring about the specifics of the circumstance.
As a result, you should not apply for a significant loan amount if you have never used credit before. In this instance, the bank is likely to reject your application, making it more difficult for you to obtain even a much smaller loan.
It's a good idea to start by checking your credit score and, if necessary, your credit history. So make sure it's spotless — after all, if you acted as a guarantor, co-borrower, or a loan was made using your information without your knowledge, there could be markings on it.
You will be able to generally comprehend what amount and circumstances you can expect after receiving information on your credit score, and you will be able to start building a positive credit history based on this.
What factors does the bank consider?
In the absence of a credit history, the bank scrutinizes the borrower's socio-demographic data with great care. First and foremost:
1. A consistent employment and earnings indicate that the borrower has a source of income from which to repay the loan.
2. The bank considers the presence of property in the property to be an extra guarantee.
3. Age — being too young or too old are both "risk factors" in the eyes of a financial institution.
4. Marital status and dependents' availability - unanticipated expenses for dependents (for example, a sick child) might lead to loan default. As a result, financial institutions are more ready to lend to persons who do not have a family.
5. The need to pay alimony, as well as the presence of judicial and property claims against a possible borrower - the more financial commitments and costs a potential borrower has, the more difficult it will be for him to repay the loan, making the bank less likely to approve the application.
6. Outstanding penalties, taxes, court debt, and even mobile phone debt are indicators of poor payment discipline and have a negative impact on a borrower's credit rating.
7. The bank examines a number of parameters in total.
So, how do you get a loan?
A borrower with no credit history can easily obtain a cash loan or a credit card if he is socially rich and earns well. A small loan of up to 3,000 euros will be available. However, the possibilities of receiving a huge sum of money all at once (for example, a mortgage) are slim.
You can use targeted loans and special offers from the seller's partner banks to secure a car loan or an education loan (educational institution, car dealership).
However, it is preferable to first create a credit history and establish oneself as a trustworthy borrower by receiving and repaying multiple small short-term loans. For this purpose, it is preferable to employ bank credit products. You can establish a credit history with the help of a credit company loan, which can actually help you acquire a loan from a bank later, but only a little one. On the other hand, if you need a huge loan, it may not be a point in your favor.
The following are the main options for acquiring a loan with no credit history:
1. Apply for small cash loans from European banks and credit firms to establish a credit history.
2. Find out what credit products are currently accessible, such as credit cards and commodities credit.
3. Take use of credit programs offered by the bank that services your main account, where you receive your wages, or where you have special terms under corporate programs (if your employer offers such an opportunity).
