If I set up a ten year loan plan but turns out I can pay it off in 5 years, will they still hold me to the original ten year interest?

Also, How much interest will i have to pay if i have no credit rating at all?

How long will it take to build good credit.

What do i have to do to get credit rating?

How do i verify annual income if i make wages, not a salary? How long should i have been working at same job before establishing i make X amount?


Most Helpful Guy

  • No, although occasionally there is an early payoff penalty in your loan agreement. But most loans don't have those anymore. And the rest of your questions depend on things you didn't disclose, like your income, occupation, credit history, etc. Go to one of the free credit score sites, like Credit Karma, and get your scores. You indeed have a rating, it just sounds like you have no history. They are two different but related things. They will also provide you with loan and credit card offers that match your financial situation. Take that information with you to a lender to get an idea of what interest rate you might pay, but stress to them you do NOT want a hard inquiry on your report until you actually submit an application. Hard inquiries lower your FICO score a bit for 2 years.

    As for getting good credit, it's pretty simple. Get any kind of credit that reports to one or more of the 3 major credit reporting agencies. Pay your bills on time. Keep your credit utilization below 20%, and when your score starts to rise, diversify the types of credit accounts you have, like car loan, personal loan, credit card, etc. Paid off loans will still show in your history and will greatly help your FICO score.

    • thanks for answering.

      other than rent i have no credit history. i have no credit cards no car no loans. i want to take out a loan but i dont have any proof im good for it.

      my income is 25,000$ a year. I want to pay a 20,000$ loan off at 200 $ a month. do you think they'll tell me to take out some credit cards and small loans to accrue credit history?

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    • The 35% rule most often comes into play when applying for bank loans. If you go over 35%, most banks won't even talk to you. But for personal, unsecured credit, it's still a good rule to follow to keep your ratio low, which helps keep your FICO up. And the 35% rule applies to the aggregate of your debt, not just a single account. So in your scenario, borrowing $20,000, that being your only monthly debt payment, at your current income, and assuming a monthly payment of $250, your ITD ratio would be right at 12%. That's not bad. That puts you in the neighborhood of your 10% target. If you do get a couple of credit cards, your ITD ratio will change depending on their balances each month. Rent isn't included in ITD because it's not debt, as it's presumed to be part of the remaining 65% of your income. Get your FICO up in the 650-700 range and that loan amount should be totally doable.

    • Thanks a lot.


What Guys Said 2

  • You can always call your loan company and talk to them about what options they have. Generally speaking though, if you pay your loan off faster, you're doing yourself a favor. The lower your credit score, the higher your interest rate will be. People with no credit at all will normally be placed in a sort of "middle of the road" interest rate.

    To have a good credit rating, the biggest part of it is just paying debts off on time/early. There are websites like credit. com or creditkarma. com that go into the specifics and how much each of those specifics will factor in.

    • thans. and yes i know the interest will be more the longer it takes. i just wanted to make sure in case of an emergency i wasn't stuck paying more than i could at any ten point. and I don't know if id set it up to take that long, just curiosity mostly.

      what is middle of the road. and can that change after you began paying. like if my credit improves while im paying , can i pay less interest, or is it fixed?

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    • The percent limit is determined by the bank you borrow from and how much of a financial risk they think you are. If you have no credit at all, you will most likely need a co-signer, so they are assessing that person's credit/income as well.

      I you earn hourly, they will probably just ask for your most recent tax return and/or your last 2 months pay stubs.

      Your interest rate can be renegotiated normally annually, assuming you are consistently paying on time. It really depends on the type of loan and the company. You just have to get with one of their reps on the specifics.

    • thanks :)

  • Is it an open ended or closed ended loan?

    Interest for a secured or unsecured loan? Unsecured I doubt you'll get one. Secured could be as high as 19%

    On this one loan? 6 months to a year establishes a good pattern.

    Take out or get a credit card. Anything you have the cash for or would normally buy using cash pay for it with the credit card & pay that off each month.

    The more cards you have the better. Use only 1 (as above) It's factored X number of cards W/ X credit limits added up to debt. So... 10K in CC & $150 debt increases your score.


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