It is well known that maintaining a good credit score is not easy. A person requires discipline, money management skills and adequate income flow to repay debts on time and maintain the score.
A credit score is an essential metric that a lender uses to decide the creditworthiness of an individual. One can get a loan quickly if they have a score of 750 or above, as it is considered a good credit score. As per industry data, when applying for credit cards, car loans, mortgages, and other financial products, around 6 out of 10 millennials get rejected.
Rajat Gandhi, Founder of Faircent.com, says, “It is well known that maintaining a good credit score is not easy. A person requires discipline, money management skills and adequate income flow to repay debts on time and maintain the score.”
Having a good credit score goes a long way in having a smooth financial life. Hence, many individuals actively seek information to manage their creditworthiness. Industry experts say to improve one’s creditworthiness, repaying loans on time is a great way to start.
However, if somebody doesn’t have good credit, they can still get a loan through a variety of other options.
Here are some of the ways to avail of a loan without a credit score;
Small loan: According to Gandhi, GenZ and millennials can quickly get smaller loan amounts for a smaller duration, instead of taking out bigger loans. You can repay them on time to improve your credit score.
Joint loan: A joint loan is a loan that is taken with a co-applicant who is eligible for a higher loan amount and can share the financial burden equally. Here a loan is taken in the name of two or more people, of which one is a primary applicant, and the other is a secondary applicant.
Credit card: Utilizing the credit card limit is another option. However, Gandhi points out, “it is a costly option and further affects the credit score. It’s a prevalent mistake that should be avoided at all costs. A loan against an existing deposit or asset such as homes, fixed deposit, etc., is a viable option.”
P2P lending: Another suitable lending option, experts say is P2P lending or Peer-to-peer lending. It offers cheap and quick loans. However, Gandhi explains, “the catch is that a person should be able to show they are working towards improving their credit score by maintaining sound banking behaviour and having a steady source of income.”
Even with a bad credit score, these measures will help you get a loan, but you still need adequate funds to repay on time. Experts point out, if a person defaults on a loan, it means the credit score will further plummet.