There are short term lenders out there who will use non-traditional credit histories when it comes to qualifying people for loans. Understanding how these short term lenders use these histories can help you when you are applying for a loan.
A non-traditional credit history is a way for loan applicants to prove their credit worthiness if they don’t have a traditional credit history. A traditional credit history basically includes a history of loans and the debtor’s history when it comes to paying back those loans. Not everyone has those types of loans in their past; however, which is how a non-traditional history can come into play.
A non-traditional credit history is basically a showing of a person’s credit history that uses other forms of bills besides loans. To compile a non-traditional credit history, a person needs to get together receipts from large bills they have paid in the past, such as rent checks to the landlord or utility bills. Showing pay stubs is also another important element of compiling a non-traditional credit history.
Basically, anything that shows a history of on-time payments can be used to illustrate a healthy non-traditional credit history that short term lenders will use. There are rent-to-own companies that people use when they are unable to purchase things out right. A history of payments with one of those companies can be used to show a good history.
People often get short term loans for quick emergency funds. Anytime you get a short term loan and pay it back, the paid balance can be used in the future should the need for another short term loan arise. For unsecured personal loans, all the lender needs to know if your current income. You secure the loan by providing the asset of your future paycheck as well as automatic access to your bank account. This allows the lender the lend to you on a short term basis. Such a loan is ideal because those types of lenders have no need or interest in one’s traditional credit history or lack thereof.
Not everyone has the FICO Score that they desire but many short term lenders are using non-traditional credit histories as a way to evaluate people and qualify them for loans. There are options out there for people who need short terms and who do not have the adequate credit history necessary to apply for a traditional loan. Many lenders nowadays specialize in using a short-term history.