A Guide to Your First Loan

Now is the time when many students are graduating college and trying to make their way in the real world. Part of becoming an adult is learning more about credit as this will become a necessary part of many's lives they purchase homes and cars. Learn how you, as a recent college graduate, can build your credit score and apply for your first loan. 


For Young People:

If you are a student, a student loan would offer you the lowest interest rate. These types of loans are repayable once you start working. When choosing a loan, student or not, it's important to consider how much you really need to borrow and how much you can actually afford to repay each month. Loaning more than you can pay off will add up quickly considering the added interest and charges for failing to meet the repayment plan. Try to get a loan with as low of an interest as possible, because a high interest means a longer time to repay the loan, which in turn costs you more.


For People with Poor or No Credit:

It's important to differentiate between poor credit and no credit. However, both are similar in that they make getting loans with the lowest possible interest rate a little more difficult. If you have no credit history to back you up, either because you have never taken out a loan or had a credit card, it may be hard for you to secure a loan. On the other hand, if you have poor credit, either from missing payments or from filing bankruptcy, it will be even more difficult. 

In both scenarios, you will have options, but these options will be limited. You will have to choose from smaller loan amounts and higher interest rates. 


For Young People to Improve their Credit

There are numerous ways to improve your credit score. The first is to make sure you name is on the electoral roll. Second, be sure to give yourself a rest period between applying for credit from different places because apply for credit leaves behind a trail that can negatively affect you if you are rejected. 

Lastly, the surest way to improve your credit, but perhaps the most difficult, is to keep on making payments on time and in full. Luckily, your credit score is NOT the only thing that credit providers use to determine whether you qualify for a loan. Your job, salary, and other assets are also considered in the process. 

Apply for a personal loan today.