First-time personal loans with no credit history: How to get a loan without credit

Lenders use your credit score to decide whether you qualify for a personal loan, as well as your interest rates, loan amount, and monthly payment. If you need a personal loan but have no credit history, you may have more options than you think.

To help, we have put together this guide on how to get a first-time personal loan with no credit history. Let us walk through the process so you can understand your options.

Can you get a loan with no credit?

Yes, obtaining a personal or installment loan without a credit history is possible. However, you may face a higher interest rate,  or unfavorable loan terms, especially when applying for an unsecured loan.

With an unsecured loan, borrowers aren’t required to provide any collateral – such as a house, car or savings account – to secure the loan. Without this collateral to protect them, lenders instead use an individual’s credit history and financial status to assess their risk in lending you money. In turn, lenders will protect their risk by charging a borrower more in interest, and offering stricter loan terms

How to get a loan with no credit history

Typically, the personal loan application process involves a hard inquiry of your credit report, and a soft credit check – which won’t affect your credit score – to get prequalified. Although qualifying for a personal loan with no credit history will not be easy, it is possible. If you’re in an emergency, you may consider using one of the methods we’ll review next to increase your chances of approval when applying for a personal loan.

Consider a secured personal loan

Most lenders offer unsecured personal loans, but some offer secured loans where you can put down collateral to demonstrate your creditworthiness. Staking collateral on your loan could make a lender more lenient in their credit requirements and qualify you for a lower interest rate. But if you default on the loan, you’ll lose whatever valuable possession you put down.

Look at online lenders

Online lenders offer flexible credit requirements for borrowers without credit or an available co-signer. These lenders may look more closely at your income than credit history or review your loan eligibility through alternative lending criteria.

Another option is joining peer-to-peer (P2P) lending platforms, where you can connect with investors who may agree to approve you for your desired loan amount. Though they are not common, this process can work for some borrowers and lenders who are comfortable taking on the risk of loaning funds. Some notable P2P platforms include LendingClub and Happy Money.

Work with your bank or credit union

If you have an established bank or credit union that you work with, consider asking to meet with an advisor to see if they have any options suitable for you. Financial institutions like banks and credit unions can use information from your account, such as your spending habits and deposit frequencies, to assess your ability to qualify.

Find a co-signer

If you want to increase your odds of approval for a personal loan, consider using a co-signer. Having someone with strong credit added to the loan can also help you get a lower interest rate and better terms. You should only seek a co-signer if you are confident in your ability to make your payments each month. Otherwise, you could damage their credit score. Remember that not all lenders offer the choice to co-sign on loans.

Ask to borrow from family members or friends

If you’re in an emergency situation and worried that you won’t qualify for traditional financing because you have no credit history, consider asking family members and friends. If they are willing to help you, you can treat this exchange like any other loan by drawing up an agreement that outlines your joint terms and conditions.

Apply for a credit builder loan

Some lenders offer credit builder loans. Specifically designed to help people without a credit history, these small loans can help you prove your creditworthiness over time.

Credit builder loans apply your monthly payments to the principal and interest of the loan, then report these payments to the credit bureaus. However, you will only have access to your money once you paid off the loan, so it may not be the best choice if you are in an emergency situation.

Tips for comparing no-credit loans

Although no-credit loans may sound promising in times of need, knowing about hidden fees or unfavorable terms that come with them is important. You do not want to risk using something that could damage your credit score rather than build it up.

Here are general tips for avoiding predatory loan lenders:

• Pay attention to the APR. Your annual percentage rate (APR) on a loan is the biggest tell of a loan’s affordability and what you’ll pay in interest. Lenders show a loan’s APR, so beware of any lender who does not.
• Understand all added fees. Most lenders will charge origination or late fees, but some no-credit loans will also charge rollover fees if you have to extend your repayment date.
• Make sure a lender assesses your repayment ability. A lender should assess your ability to repay the loan by analyzing your bank accounts and monthly income. Otherwise, they may be counting on you to roll your debt over or take out another loan to cover the first.
• Understand your repayment schedule. Know upfront when your full repayment is due, whether that’s two weeks out from approval, months, or years. This can help you avoid late payments by knowing when your bank account will incur automatic withdrawals.
• Research the lender’s reputation. Even if a loan offer has great rates and affordable fees, take the extra step of looking into the lender themselves. Ask around or look up online reviews of the lender to decide their credibility.

No-credit loans to avoid

Since some good options are available for getting a first-time personal loan without a credit history, you should avoid these short-term predatory loans.

• Payday loans: Because payday loans don’t require a credit check, they may entice borrowers without an established credit history. However, these loans often come with an interest rate of 400% or higher and have an extremely short repayment term of around two weeks.
• Pawn shop loans: When you use a pawn shop loan, you’re putting something of high value down as collateral such as jewelry, autographed sports memorabilia or family heirlooms. Depending on the item's value, you may be able to get a small loan, but you will typically face a high interest rate and risk losing your valuable item.

Reasons why you do not have a credit score

Your credit score could be nonexistent for multiple reasons. Having no credit score is also quite different from having a low or “bad” credit score. A low credit score signals to lenders that you are a higher risk because you have been unsuccessful in managing your finances or earlier loans. When you have no credit history, no record of your financial history exists.

You may have no existing credit history because:

• You have never had a credit card or taken out a loan.
• You have not used credit within the past two years.
• You have recently migrated to the United States.

FAQs about loans for first-time loans with no credit history

Have a more specific question about getting a loan with no credit? See if we have answered it below.

How can I get personal loan approval with no credit?

You can try to get a loan by talking with the bank or credit union you have been working with about any deals they could offer an established member. Other practical options include having a co-signer, using a credit builder loan, or borrowing from friends or family members.

How can I get a car loan with no credit?

Getting approved for a car loan with no credit is similar to getting a personal loan – and a personal loan can sometimes even be used as an auto loan. With car loans, though, you have two added options: dealer financing and making a bigger down payment.

If you finance through the dealer, you could qualify for special loan offers for customers with a low credit score or no credit score. If you can afford it, making a bigger upfront payment could also convince a dealer you are trustworthy.

How can I get a quick loan with no credit check?

You could acquire a quick loan like a payday, pawn shop or car title loan without a credit check, but these types of loans come with incredibly high rates and short repayment periods, so you should avoid them if possible.

Final Thoughts

Getting a first-time personal loan with no credit history is tough but possible. Whether you find a lender that is willing to collaborate with you or you take the time to wait and build credit, it is important to continue practicing good financial habits. Monitoring your credit report and making on-time payments toward your loan will help you get the score you need to qualify for favorable loan options in the future.

Once you’ve built a strong credit history, you can start the personal loan process with RocketLoans^SM to find the loan that best fits your needs.