If you are a student or an unemployed looking to secure a loan for the first time or with a bad credit, you will soon find out that it’s going to be difficult. Most banks and loan companies will not grant you a credit if you are not regularly employed.

Despite the challenge, it does not mean you cannot really get a loan because there are specialist lenders who offer loans but with high-interest rates. However, you don’t need to take this road and risk getting a bad credit score because you’re not able to pay it on time or pay it at all.

Improving your credit history

In order to secure a loan, you need to have an attractive credit score. But how can you do this if you are a student or unemployed?

If you are a student with no credit or bad credit history, the best place to start borrowing is from the federal government. That’s because your approval for a federal loan will not be based on your credit history but on your need for a financial assistant. Even if they will conduct a credit check on you, your credit score will not be included in the criteria at all.

What you need to do is fill out the Free Application for Federal Student Aid (FAFSA) form. The federal government will use it to find out your financial situation as well as your family’s. They will also need it to determine how much you need and once the application process is complete, you will know what type of federal loan you’ve qualified.

If you are unemployed, rebuilding your credit score might be more difficult. If the cause for the bad credit score is late repayment, pay them off and start with those high credit card balances. Although you might not be able to pay all of them immediately, being consistent will soon pay off.

Be mindful of your finances

While you’re paying off those credit balances, you must also stop living off your credit cards. That might have been valid when you are unemployed but once you find a job again, you should stop depending on your cards. Instead, you have to learn to live within your means and stop spending on the unnecessary things.

Being mindful of your finances also means getting a realistic idea how much money you’ll be making and creating a budget out of that.

When assessing your income, you also need to consider the taxes and bill you have to pay. The first paycheck you’re going to get after being employed once again will give you an idea of how much you’ll be making in the months to follow.

Once you have that figured out, it’s time to create a budget. Debt repayment as well as paying extra to pay off all existing debts you have is part of the budget plan you should create. Everything should be deliberate and not left to chance. If you discipline and stick to the plan you’ve created, it won’t be long before you will be able to see that your credit score has improved and you’re back on track again.