I don't have any credit, but it seems like you have to have it to get it. How do I start?
I have seen many people who wanted to borrow money ask for $10,000 on an unsecured basis as their first ever loan. That doesn't happen. I don't recommend borrowing and securing the loan with the proceeds from the loan either. Some myths say you can do that and pay it back in a month to build your credit. The problem is, that doesn't establish how you'll repay your loan over time.
I do recommend borrowing when you have a real purpose for the funds. Either borrow a small amount, (which will be defined by your disposable income) and repay it on time, borrowing more the next time and consecutively building your borrowing power. You could also make a purchase and obtain a loan, secured by that purchase. This could be a car loan as an example. Often you make a down payment which now represents your sincerity to repay the debt. You wouldn't want to lose the equity you have by virtue of the down payment, and the seller, the car dealer, may finance you or also be obligated to the bank that buys that loan. If you don't pay, the bank goes to the car dealer. The car dealer could be forced to pay the loan off and ask you for payment or the car. This helps the dealer earn a profit and spreads the risk the bank has to both you and the dealer. That is a safer transaction. Note that if you finance the debt with the dealer, ensure they report your payment history to the credit bureau so that you do build on your credit record.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
I have seen many people who wanted to borrow money ask for $10,000 on an unsecured basis as their first ever loan. That doesn't happen. I don't recommend borrowing and securing the loan with the proceeds from the 