Getting a loan is no such taboo now days. Many things now revolve around credit. But one most important thing for credit is credit score. Credits help in building the credit score, increasing the score and maintaining the score. But what to do when you have no credit? What to do when you have bad credit? And when in either case, you are not able to get any loan? In any such situation, you have to get into win-win situation from most lost phase or a loose-loose period.
The situation where you are unable to get any loans, needs a basic awareness how can be the score built? What are different types of credits available in the market? Let's understand the different types of credits.
Now, as the names suggest, Installment based credit is the one in which you have to pay the installments on the regular basis of how you have dealt with the bank or the NBFC and it will be closed after the principal amount and the interest rate is paid. Revolving based credit is the one where you use the credit, repay it, and you can again use the credit. The examples for the same are mentioned in above table.
Secured credit is the one where some property, or the amount is given in exchange of the credit you have taken. In unsecured credit, there no security kept. Again the example is shown in the above table.
Now suppose, you are planning a personal loan with low CIBIL score, what are the chances that you might get loan? Personal loan is very minutely watched phenomena. It depends on the previous history of how well you would have handled credits. It's a high risk for any organization to offer you personal loan as it's on the intention of the borrower if he/she will repay it or not. So it's even important for banks to know that if they have put their money on prospect or not. This is also one of the major factor which can make or break your credit score.
Coming back to the point that if no one is ready to give you loan, how can be the score made? In general cases, it's difficult to get a loan specially unsecured one if you are a no history customer i.e. if you have never taken any kind of loan or you have low credit score. As it becomes a risk factor for the lander. In such cases, you can always opt for secured kind of credit. In secured kind of credit since the security of either property or gold or Fixed Deposits are kept, becomes less risky. Even if the borrower opts out to not pay the amount for subsequent period of time, banks can consolidate the property and get the amount.
If suppose you are checking the personal loan interest rate with various bank, the % slab varies between 9% - 15% depending on your credit score. But as mentioned it become really difficult if one has to built the score to even a loan of that kind. Secured credit is the best way to opt in that. Again, it's not necessary that you will get the secured loans if you have any of the mentioned things. It will also depend on your repaying capacity. How much would you be able to pay as EMIs, would mention the amount of loan/credit you would get!
It’s advisable to get a secured credit if you are trying to build your score, but unable to get any loans, as you will get the credit as well and your repaying behavior will help in building the credit score or increasing the credit score.