Almost everyone will at one time or another will attempt to get a loan from a bank, or another type of financial institution. Cars loans student loans, mortgages, business or personal loans are just some of the types of loans that a person may attempt to get in their lifetime. One of the tools a bank will use in determining if they are willing to loan the money, is a credit report.
A basic credit report consists of personal information of the borrower. Name, date of birth addresses, social security number, etc. It also list past and present credit history., and how many times a lender as inquired about the borrower.. All this information is used as a tool to decide if the person is credit worthy for the loan. A good track record of payment history, and a low debt to income ratio is the key to getting a loan. Negative things are missing or slow payments, A lot of debt, and any judgments or bankruptcies in the past.
Having no credit at all can be as bad or even worse then having bad debt. People with no credit face a difficult challenge when trying to obtain a loan. The lender has nothing to base his decision on, with no credit history, and therefore may refuse to grant a loan. One possible option is to have a person with good credit co-sign the loan. The lender may agree to a granting a loan then. The co-signer is responsible for the loan if the main borrower defaults.
Most everyone has some type of credit history by the time they are young adults. Student loans for college are one of the easiest forms of loans to get with no credit history. These are usually government backed making it easier to get, and no payments are necessary till the person graduates.
The best way to get a loan is to start building a credit history, which is favorable to lenders. There are many secured credit cards available for people who need to establish credit. Money is deposited into an account by the borrower, and in turn the lender issues them a credit card. Usually the limit is very small, and many fees are attached.. Its quite costly but in the long run provides the person with a credit history.