How to Build Up Credit for People with No Credit

I am fed up being rejected by credit companies every time I apply for a credit card. I applied for Wal-Mart, JC Penney, Visa, Mastercard, Discovery and a lot more type of credit cards, but they always send me a letter saying that I lack of credit report. I am almost frustrated not to be able to build a credit and don’t know how I can get one because they always reject my application.
In May 2006, I established a gift shop business. I buy handicrafts and jewelry from other country and sell them here. Recently, I want to expand my business by buying more items and rent more space, but I’m not in a good financial situation. Furthermore, it’s hard to apply for a business loan because I don’t have credit score.

I couldn’t get a loan anywhere, from the bank or from loan companies. I was inquiring here and there until my eyes spotted to the website of Prosper Marketplace, Inc. based in San Francisco, California. I looked into the website and found out some interesting information that is very useful for my situation.

After reading and understanding how it goes, I decided to join a group. This is the basic requirement when you want to either borrow or lend money. The leader of the group will decide whether to accept or reject your membership after checking your identity and also your credit score.

I felt discouraged at first because I was thinking this would create the same story as before. Being rejected! Fortunately, I was accepted and I started to put my loan listing there. This website is very interesting. If most of you have used eBay and learnt how it works, this website does almost the same thing. The difference is instead of listing and bidding on items, people list and bid on loans. The parties are borrower, lender and Prosper Marketplace. If you want to borrow, you should create a listing based on your need. You can borrow up to $25,000. I started with a loan of $1,000. The system will guide you to the acceptable interest rate you can offer based on your credit grade. They pull out your credit report from the credit report company and you will fall under one of these 8 credit grades: (start from highest to lowest): AA, A, B, C, D, E, HR, NC.

Obviously, I fall under NC (No Credit) grade, but I was still allowed to create a loan listing. This is the most interesting part. After you create a listing, it will be posted in the loan listings and prospect lenders will start look into it. Their basis on bidding is the interest rate you offer and they will put your credit grade into consideration. If you fall under No Credit or High Risk credit grade, most likely you have to offer higher interest rate than people who fall under AA to E credit grade. In your listing, you have to be able to convince prospect lenders that you can pay the loan on time. Basically, if you want to build a credit you are restricted to follow this rule. You have to discipline yourself to pay the loan on time. You might have to list your income and expenses to be able to convince the prospect lender that you have extra money to do your monthly payment.

When do the listing you can choose the duration of the listing up to 10 days. You may get the loan funded on or before the duration. Bidders who win will be the lenders of your loan.

I had to create loan listing for 3 times. There were not enough bidders on my first 2 listings. If your listing is not fully funded on the last day of listing or there are not enough bidders to bid, the loan will not be funded to your account. On my last listing, I tried to convince the prospect lenders that the reason I need a loan is to build my credit besides the need of my business expansion. I got my loan fully funded by 14 lenders out of 74 bidders. After having been reviewed by the Prosper, the loan was transferred to my verified bank account. The interest rate agreed was 16.95%.The monthly payment is $35.63 monthly for duration of 3 years. The loan payment will be automatically debited from your verified bank account.

Some people would like to build a good credit in year 2007. For you who don’t have one, build it with Prosper Marketplace, Inc. For people who have been rejected for so many times to apply for a loan because of No Credit, you can try this yourself, because some prospect lenders will put you into consideration if you have a good intention in borrowing.