If you don't have an established credit history, you may be wondering whether you can still qualify for loans. Luckily, there are many ways you can still get a personal loan with no credit. Following one of these five tips can give you some viable options and help you get the funds you need fast:
1. Get a co-signer
One of the oldest tricks for qualifying for a loan without credit is to get someone to co-sign with you. Co-signing is when someone with established credit agrees to also take legal responsibility for the loan. Depending on their credit score, this often results in accelerating the loan approval.
Although the co-signer is offering assistance, there should be a general understanding that they will not pay for the loan in any way. Also, it's important that you make your payments on time and in full. Otherwise, it could hurt the credit score of your co-signer or leave them liable for paying the debt.
2. Be added to an account
Another way to leverage a trusted adult's credit score is to ask them to add you as an authorized user on one of their credit accounts. They don't even have to give you a physical card. They can just merely call the company and have your name added.
The advantage is that every time they make a payment, it will appear as a positive action in your credit history. Similar to co-signing, that will help you to build your own credit score by capitalizing on their good financial habits.
3. Find lenders with less strict requirements
Many lenders offer less strict credit score requirements, so you may be able to get approved with no credit history. These lenders offer loans to borrowers with all types of credit scores, will consider additional factors like income, employment, history, and current debts when deciding whether to approve you. Just make sure the interest rates and terms work for your budget and needs before applying so you can get the right loan for your financial situation.
4. Apply for a secured loan
With secured loans, the lender will want something of yours that they can hold in case you default on the loan. This is what's known as collateral. Collateral might be any asset of value such as a vehicle, jewelry, retirement account, or even something collectible.
Since these loans are secured by collateral, they are considered less risky to the lender, so you may not need an established credit history to get approved. But borrowers have to take extra care to make sure that they don't miss a payment, or they might risk losing the item they put up as collateral.
5. Try a credit-builder loan
Another option you can try is a credit-builder loan. This is a special type of loan designed for people with little or no credit where they apply for the loan and begin making payments with interest upfront. But keep in mind that with a credit-builder loan, you won't receive any funds just yet. After making all the payments on time and in full, the principal will be returned to you.
Although this method can be a little unconventional, prompt payments will be reported to the credit bureaus and can help build your credit score. That will increase your chances of successfully qualifying for other loans in the future.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
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Name: Michael Bertini
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