You might think that you have the model application to get a loan – no prior history of taking a loan, no credit issues with a loan or credit card, no credit cards ( or maybe one at most). In effect, you have a perfect debt-free record.

However, lenders do not see a credit-free past in the same way. They want a substantial credit record comprising of multiple loans or credit cards over a long time span to check if you have demonstrated responsible repayment behaviour in the past and to evaluate if you are at low risk for defaulting on payments. They cannot do this with a customer who has absolutely no credit record, or only a very minimal record.

What is the way out of this situation? How do you build a credit record when no one is willing to extend credit to you?

Fortunately, there are a couple of actions you can take that are guaranteed to build your credit history, provided you do it the right way.

Take out a series of small value loans: Even if you don’t need these small amounts, a small loan is an invaluable way of building your record if you have absolutely no credit history. Each loan that you repay in full and on time will help you build a good credit record. Small loans do not require an extensive credit history for approval so they are a good way for people with no prior credit history to create a credit record. It is very important to make all your repayments on time and in full. Any late or skipped payment will have a negative effect on your credit score. Ensuring that you have a perfect repayment record will play a substantial role in making you loan eligible in the quickest time.

Apply for a secured credit card: A secured credit card is another way for people with no prior credit history to become loan eligible. It works exactly like a regular credit card, the only difference being that you will need to make a security deposit with the issuing bank in order to qualify. In case you do not make your payment, the bank will use your security deposit to recover their dues.

Every time you make your monthly payment to clear your credit card bill, the bank reports it to the credit bureaus. Each payment you make will have an immediate positive impact on your score and help build a healthy credit profile. 

If you have a problem with securing a loan because of a lack of prior credit history, you can approach a reputed credit management company, like CreditMantri, to help build your credit record in the quickest and most optimum way.