Are you looking for a loan? It may be beneficial to take a credit card first.
Type ‘auto loan’ on Google and you’ll soon find your screen flooded with offers with interest rates as less as 7%. Sounds lovely, but if you are a first timer (never taken a credit card or a loan before) when you actually do apply you may not get this interest rate. Why?
There’s a lot that goes on when banks decide your interest rates. They assess all the risk factors involved in lending you an amount - from your earnings to your past borrowing history, everything is mapped. If you’ve never taken a credit card or loan before, there’s a high chance that this interest would be sky-rocketing. And by sky-rocketing, we mean as high as 17%. No kidding!
This is because, for people who are new to credit, banks don’t have any reference of your past credit behaviour. It’s a blind shot they’re taking, which means very high risk. And if they’re going down this path, their thinking is they better earn more out of it.
So, what’s the solution?
The key here is to start small. Before going for any big loan, make sure you have a favourable credit history and score. And this can be done just by making a simple switch from your debit card to a credit card. Regular spends which you’re anyway making every month, like your rent, electricity bills, OTT subscriptions, shopping etc. can now help you build your credit score. (Also read other ways you can start building your credit score)
But here’s the catch! Even credit card issuers check your credit score before issuing you a card. They mostly do not issue cards to people with no credit score. This is when OneCard can come to your rescue.
If you do not have a prior credit score, all you need to do is just create an FD and enjoy a credit limit of 110% of your FD amount and get an annual return of 6.1% of your FD. And the icing on the cake is that when you use your OneCard for your purchases and pay back in time, your credit score starts to build in the bureaus. Once you have a good credit score (above 750) then you can withdraw your FD if you wish to. Now you’re sorted. Can it get better than this?!
But the key is to start soon!
Click here to download OneCard and start building your credit score.
- OneScore , February 12, 2022