It seems like a kind of Butterscotch Man problem. The Butterscotch Man, you see, can’t run until he gets warm and can’t get warm until he runs. Similarly with credit, you can’t get a loan without good credit, but you can’t get good credit without taking out a loan.
The problem with having no credit history is that you are a big question mark to the credit industry. They have no place to start in establishing the loan amount to grant, the interest rate to charge, or the number of installments or loan length. Read the rest of this entry »