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Establishing A Credit History Through A No Credit Car Loan

American Government Special Collections Reference Desk

Establishing A Credit History Through A No Credit Car Loan

Lenny Dalembert
March 11, 2013


Many people find it ironic that they cannot obtain a loan because they do not have prior credit history. But how do they build a good credit history if they are denied the opportunity? On the other hand, there are those who think that by not availing of any loan, they will not have any problem in securing a loan in the future as they will not have any bad credit rating to reveal. The reality is that lending to a person is an investment. It is not enough for lending institutions to know that the person who wants to avail of a loan can show proof of capacity to pay off his financial obligations. More importantly, the person should show that he has a good history of making regular and timely payments.

But despite these, a person can still avail of a no credit car loan. Lending institutions that offer this type of loan are more lenient to those who have a bad credit history or those who simply do not have a credit history to speak of. However, it is still a good idea to establish one's credit history so that one can procure credit even from traditional institutions.

In order to become an attractive loan candidate, one must show the lending institution that he is financially responsible. One of the best ways to show this is to open up a bank account. By regularly making deposits into a bank account, the person can show the lending institutions that he does not simply spend his income on luxuries or fads but makes an effort to make sacrifices in order to save up and prepare for the future.

Credit cards have taken a bad rap from many personal finance gurus but they are a great way to establish credit history. By applying for a credit card, using it and paying for debt incurred, you are showing lending institutions that you know how to manage your expenses against your income stream. Just like opening a bank account, getting a credit card shows that you can be financially responsible. In order to avoid getting mired in credit card debt, make sure that the credit limit is low and make regular payments.

It is also a good idea to have a consistent address as well as have utility bills under your name. This shows lenders that you have the capacity to make regular monthly payments. Otherwise, if you continue to change your address, this gives the lenders the impression that you are not responsible enough to pay for rent or make payments for a mortgage.

Finally, it is important to have a regular job. After all, the lenders will try to look at your capacity to pay off your loans.


There are those who think that by not availing of any loan, they will not have any problem in securing a loan in the future as they will not have any bad credit rating to reveal. Click here to learn more.



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